EXECUTION COPY
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IOS CAPITAL, INC.,
ORIGINATOR AND SERVICER
IKON RECEIVABLES FUNDING, INC.,
SELLER
AND
IKON RECEIVABLES, LLC,
ISSUER
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FORM OF ASSIGNMENT AND SERVICING AGREEMENT
Dated as of ______ __, 1999
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ALL RIGHT, TITLE AND INTEREST IN AND TO THIS AGREEMENT OF IKON RECEIVABLES, LLC
HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF [ ],
AS TRUSTEE, UNDER THE INDENTURE DATED AS OF [______ __, 1999], FOR THE BENEFIT
OF THE PERSONS REFERRED TO THEREIN.
TABLE OF CONTENTS
Page
R E C I T A L S..............................................................1
A G R E E M E N T S..........................................................2
SECTION 1. CAPITAL CONTRIBUTION.............................................2
1.01 Contribution of Leases.............................................2
1.02 Capital Contribution...............................................2
1.03 Transfer of Leases; Grant of Security Interest.....................3
1.04 Servicer to Act as Custodian.......................................3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR.................4
2.01 Corporate Organization and Authority...............................4
2.02 Business and Property..............................................5
2.03 Financial Statements...............................................5
2.04 Equipment and Leases...............................................5
2.05 Payments...........................................................9
2.06 Full Disclosure....................................................9
2.07 Pending Litigation.................................................9
2.08 Title to Properties...............................................10
2.09 Transactions Legal and Authorized.................................10
2.10 Governmental Consent..............................................10
2.11 Taxes.............................................................11
2.12 Compliance with Law...............................................11
2.13 ERISA.............................................................11
2.14 Ability to Perform................................................12
2.15 Ordinary Course; No Insolvency....................................12
2.16 Assets and Liabilities............................................12
2.17 Fair Consideration................................................12
2.18 Ability to Pay Debts..............................................12
2.19 Bulk Transfer Provisions..........................................13
2.20 Transfer Taxes....................................................13
2.21 Principal Executive Office........................................13
2.22 Servicing Provisions Customary....................................13
2.23 Nonconsolidation..................................................13
2.24 Capital Contribution Treatment....................................14
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER....................14
3.01 Corporate Organization and Authority..............................14
3.02 Business and Property.............................................15
3.03 Ownership and Security Interest...................................15
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3.04 Transactions Legal and Authorized.................................15
3.05 Governmental Consent..............................................15
3.06 Compliance with Law...............................................16
3.07 Assets and Liabilities............................................16
3.08 Fair Consideration................................................16
3.09 Ability to Pay Debts..............................................16
3.10 Bulk Transfer Provisions..........................................17
3.11 Transfer Taxes....................................................17
3.12 Principal Executive Office........................................17
3.13 Nonconsolidation..................................................17
3.14 Capital Contribution Treatment....................................18
SECTION 4. ADMINISTRATION OF LEASES........................................18
4.01 Servicer to Act...................................................18
4.02 Lease Amendments and Modifications................................20
4.03 Defaulted Leases..................................................21
4.04 Costs of Servicing; Servicing Fee; Administrative Expenses........22
4.05 Other Transactions................................................22
SECTION 5. SERVICER ADVANCES AND ORIGINATOR'S SUPPORT......................22
5.01 Late Lease Payments...............................................22
5.02 Early Termination Leases..........................................23
5.03 Indemnification...................................................23
5.04 Purchases; Other Payments.........................................24
5.05 Payment Advices...................................................25
SECTION 6. INFORMATION TO BE PROVIDED......................................25
6.01 Monthly Status Reports; Servicing Reports.........................25
6.02 Annual Independent Public Accountant's Report.....................27
SECTION 7. THE SERVICER....................................................27
7.01 Merger or Consolidation of the Servicer...........................27
7.02 Limitation on Liability of the Servicer and Others................28
7.03 Servicer Not to Resign or Be Removed..............................28
7.04 Financial and Business Information................................28
7.05 Officers' Certificates............................................30
7.06 Inspection........................................................30
7.07 Servicer Records..................................................30
SECTION 8. THE ORIGINATOR..................................................31
8.01 Merger or Consolidation of the Originator.........................31
8.02 Control of Seller.................................................31
8.03 Financial and Business Information................................31
8.04 Officers' Certificates............................................32
8.05 Inspection........................................................33
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8.06 Books and Records.................................................33
8.07 Communications....................................................33
SECTION 9. THE SELLER......................................................33
9.01 Merger or Consolidation of the Seller.............................33
9.02 Control of Issuer.................................................33
9.03 Financial and Business Information................................34
9.04 Inspection........................................................34
9.05 Books and Records.................................................34
9.06 Communications....................................................35
SECTION 10. DEFAULT........................................................35
10.01 Servicer Events of Default.......................................35
10.02 Termination......................................................37
10.03 Trustee to Act; Appointment of Successor.........................37
10.04 Servicer to Cooperate............................................38
10.05 Notification to Noteholders......................................38
10.06 Remedies Not Exclusive...........................................38
SECTION 11. SUBSTITUTION AND ADDITION OF LEASES............................38
11.01 Substitution and Addition........................................38
11.02 Procedure........................................................40
11.03 Objection and Purchase...........................................41
11.04 Originator's, Seller's and Servicer's Subsequent Obligations.....41
SECTION 12. ASSIGNMENT.....................................................42
12.01 Assignment to Trustee............................................42
12.02 Assignment by Originator, Seller or Servicer.....................42
SECTION 13. NATURE OF OBLIGATIONS AND SECURITY THEREFOR....................42
13.01 Obligations Absolute.............................................42
13.02 Security for Obligations.........................................43
13.03 Further Assurances; Financing Statements.........................43
SECTION 14. DEFINITIONS....................................................43
SECTION 15. INTER-COMPANY LOANS............................................49
15.01 Inter-Company Loans..............................................49
SECTION 16. MISCELLANEOUS..................................................50
16.01 Continuing Obligations...........................................50
16.02 GOVERNING LAW....................................................50
16.03 Successors and Assigns...........................................50
16.04 Modification.....................................................50
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16.05 No Proceedings...................................................50
16.06 Notices..........................................................50
16.07 Counterparts.....................................................51
16.08 Nonpetition Covenant.............................................51
Schedule 1 - Subsidiaries of the Seller
Exhibit A - Schedule of Leases and Equipment
Exhibit B - Form of Inter-Company Loan Note
Exhibit C - Form of Receivables Servicing Report
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ASSIGNMENT AND SERVICING AGREEMENT
This ASSIGNMENT AND SERVICING AGREEMENT is made and dated as of
______ __, 1999, by and between IKON RECEIVABLES, LLC, a Delaware limited
liability company, as acquiror hereunder (the "Issuer"), IOS CAPITAL, INC., a
Delaware corporation, as originator of the Leases (defined below) (in such
capacity, the "Originator") and servicer (in such capacity, the "Servicer")
hereunder, and IKON RECEIVABLES FUNDING INC., as contributor of the Leases (the
"Seller").
R E C I T A L S
A. The Originator wishes to contribute, transfer, assign, set over
and convey to the Seller, and the Seller wishes to acquire from the Originator,
all right, title and interest of the Originator in, to and under the Leases and
the Equipment (such terms and all other capitalized terms used herein having the
meanings ascribed thereto in Section 14 hereof unless otherwise indicated).
B. The Seller wishes to contribute, transfer, assign, set over and
convey to the Issuer, and the Issuer wishes to acquire from the Seller, all
right, title and interest of the Seller in, to and under the Leases and all
right, title and interest of the Seller in covenants, representations,
warranties and other obligations of the Originator (including the Originator's
Purchase Obligation) under this Assignment and Servicing Agreement.
C. Contemporaneously with such contribution and assignment, the
Seller wishes to contribute to the Issuer, and the Issuer wishes to acquire from
the Seller, all right, title and interest of the Seller (other than its
ownership interest) in and to each item of Equipment subject to each Lease.
D. Pursuant to the Indenture, the Issuer is issuing one class of
[ ]% Class [A-1] Lease-Backed Notes, Series 1999-A in the aggregate principal
amount of $[ ] (the "Class [A- 1] Notes"), one class of [ ]% Class
[A-2] Lease-Backed Notes, Series 1999-A in the aggregate principal amount of
$[ ] (the "Class [A-2] Notes"), one class of [ ]% Class [A-3]
Lease-Backed Notes, Series 1999-A in the aggregate principal amount of
$[ ] (the "Class [A-3] Notes"), one class of [ ]% Class [A-4]
Lease-Backed Notes, Series 1999-A in the aggregate principal amount of
$[ ] (the "Class [A-4] Notes"; together with the Class [A-1] Notes,
the Class [A-2] Notes and the Class [A-3] Notes, the "Class [A] Notes"), one
class of [ ]% Class [B] Leased-Backed Notes, Series 1999-A in the aggregate
principal amount of $[ ] (the "Class [B] Notes"; together with the
Class [A] Notes, the "Notes"),the proceeds of which are being used by the Issuer
to make payment to the Seller for the Leases.
X. Xxxxxxxx to the Indenture, the Issuer is granting, inter alia, to
the Trustee, for the benefit of the holders from time to time of the Notes, a
security interest in all right, title and interest of the Issuer in the Asset
Pools, to and under the Leases, the interests in the Equipment, the property
comprising the Asset Pool and this Assignment and Servicing Agreement.
A G R E E M E N T S
SECTION 1. CAPITAL CONTRIBUTION
1.01 Contribution of Leases.
(a) By their execution and delivery of this Assignment and Servicing
Agreement, the Originator hereby contributes, transfers, assigns, sets over and
conveys to the Seller, and the Seller hereby acquires from the Originator
without recourse (except to the extent of the Originator's Purchase Obligations
as set forth herein), all of the Originator's right, title and interest in and
to each of the Leases (including the right to receive all payments due or to
become due thereunder since the Cut-Off Date).
(b) By their execution and delivery of this Assignment and Servicing
Agreement, the Seller hereby contributes, transfers, assigns, sets over and
conveys to the Issuer, and the Issuer hereby acquires from the Seller without
recourse (except to the extent of the Seller's Purchase Obligations as set forth
herein), all of the Seller's right, title and interest in and to each of the
Leases (including the right to receive all payments due or to become due
thereunder since the Cut-Off Date), the Equipment (other than the Seller's
ownership interest in the Equipment) and all right, title and interest of the
Seller in the covenants, representations, warranties and other obligations of
the Originator (including the Originator's Purchase Obligation) under this
Assignment and Servicing Agreement.
1.02 Capital Contribution.
(a) The Originator and the Seller each acknowledge and confirm that
the Originator, as consideration for the equity interests in the Seller, is
contributing and transferring to the Seller, and in connection with each
transfer and assignment of Additional Leases and Substitute Leases, the
Originator will contribute and transfer to the Seller, without recourse, all
right, title and interest of the Originator in and to each item of Equipment
subject to each Lease, Additional Lease and Substitute Lease. After such
contribution and transfer by the Originator to the Seller, all right, title and
interest of the Originator in and to each item of Equipment subject to each
Lease shall be vested in the Seller.
(b) The Seller and the Issuer each acknowledge and confirm that the
Seller, as consideration for its membership interests in the Issuer, is
contributing and transferring to the Issuer, and in connection with each
transfer and assignment of Additional Leases and Substitute Leases the Seller
will contribute and transfer to the Issuer, without recourse, all right, title
and interest of the Seller (other than its ownership interest) in and to each
item of Equipment subject to each Lease, Additional Lease and Substitute Lease.
After such contribution and transfer by the Seller to the Issuer, all right,
title and interest of the Seller (other than its ownership interest) in and to
each item of Equipment subject to each Lease shall be vested in the Issuer. In
addition, the Seller is contributing and assigning all its interest in the
covenants, representations, warranties and other obligations of the Originator
(including the Originator's Purchase Obligation) under this Assignment and
Servicing Agreement.
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1.03 Transfer of Leases; Grant of Security Interest.
It is the intention of the parties hereto that each transfer of
Leases, Additional Leases, Substitute Leases, Lease Payments and all other
amounts due or becoming due with respect thereto and Equipment (or interests
therein) being made hereunder shall constitute a capital contribution and not a
loan. Neither the Originator nor the Seller shall take any action inconsistent
with the treatment of such transfers as capital contributions or with the
Issuer's ownership of the Leases and all other amounts due or becoming due with
respect thereto and the interests in the Equipment. Each of the Originator and
the Seller shall indicate in its records that ownership of each of the Leases
and the interests in the Equipment (other than the Seller's ownership interest)
is held by the Issuer, and each shall respond to any inquiries from third
parties by indicating that its ownership in the Leases, Additional Leases,
Substitute Leases and all other amounts due or becoming due with respect thereto
and the interests in the Equipment (other than the Seller's ownership interest)
is held by the Issuer. In the event, however, that a court of competent
jurisdiction were to hold that any transaction evidenced hereby constitutes a
loan and not a capital contribution, it is the intention of the parties hereto
that this Agreement shall constitute a security agreement under applicable law
and that the Issuer and the Trustee shall be deemed to have been granted a first
priority security interest in (a) the Leases, Equipment and all Lease Payments,
Casualty Payments, Termination Payments and other amounts now due or becoming
due with respect thereto since the Cut-Off Date (other than any prepayments of
rent required pursuant to the terms of any Lease at or before the commencement
of the Lease and any payments due before the Cut-Off Date) and all Additional
Leases and Substitute Leases and all Lease Payments, Casualty Payments,
Termination Payments and other amounts due or becoming due with respect thereto
since the effective date of their respective addition or substitution (other
than any prepayments of rent required by the terms of any Lease at or before the
commencement of the Lease and any payments due before the effective date of such
addition or substitution), (b) all rights of the Issuer to or under any
guarantees of or collateral (including all rights of the Issuer in any security
deposits) for the Lessee's obligations under any Lease, (c) all interests of the
Issuer in the Equipment at any time subject to any Lease including any security
interest of the Seller in the Equipment and (d) all proceeds of the conversion,
whether voluntary or involuntary, of any of the foregoing into cash or other
property.
1.04 Servicer to Act as Custodian.
(a) The Servicer shall hold and acknowledges that it is holding the
Leases and all other Granted Assets that it may from time to time receive
hereunder as custodian for the Trustee.
(b) The Servicer shall perform its duties under this Section 1.04 in
accordance with the standard set forth in Section 4.01 as such standard applies
to servicers acting as custodial agents. The Servicer shall promptly report to
the Trustee any failure by it to hold the complete Leases as herein provided and
shall promptly take appropriate action to remedy any such failure but only to
the extent (i) any such failure is caused by the acts or omissions of the
Servicer and (ii) such remedial action is otherwise within its capabilities or
control. As custodian, the Servicer shall have and perform the following powers
and duties:
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(A) hold the Leases on behalf of the Trustee for the benefit of the
Noteholders, maintain accurate records pertaining to each Lease to enable
it to comply with the terms and conditions of this Assignment and
Servicing Agreement, and maintain a current inventory thereof;
(B) implement policies and procedures in accordance with the
Servicer's normal business practices with respect to the handling and
custody of the Leases so that the integrity and physical possession of the
Leases will be maintained; and
(C) attend to all details in connection with maintaining custody of
the Leases on behalf of the Trustee on behalf of the Noteholders.
(c) In acting as custodian of the Leases, the Servicer agrees
further that it does not and will not have or assert any beneficial ownership
interest in such Leases. The Servicer on behalf of the Noteholders shall mark
conspicuously each original contractual document with a Lessee, and its master
data processing records evidencing each Lease with a legend, acceptable to the
Trustee, evidencing that all right, title and interest in the Leases (other than
the Seller's ownership interest in the Equipment) has been granted to the
Trustee as provided in the Indenture.
(d) The Servicer agrees to maintain the Leases at either its office
in [Macon, Georgia] or at such other offices of the Servicer as shall from time
to time be identified by prior written notice to the Trustee. Subject to the
foregoing, the Servicer may temporarily move individual Leases or any portion
thereof without notice as necessary to conduct collection and other servicing
activities.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR
The Originator hereby represents and warrants as follows:
2.01 Corporate Organization and Authority.
The Originator:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation,
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to
carry on its business as now conducted (except where the
failure to have such licenses and permits would not have a
material adverse effect on the business or condition
(financial or otherwise) of the Originator or impair the
enforceability of any Lease) and to enter into and perform its
obligations under this Assignment and Servicing Agreement, and
the transactions contemplated hereby, including performance of
the duties of the Servicer and the Originator's support
obligations hereunder, and
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(c) has duly qualified and is authorized to do business and is in
good standing as a foreign corporation in each jurisdiction
where the character of its properties or the nature of its
activities makes such qualification necessary (except where
the failure to be so qualified or in good standing would not
have a material adverse effect on the Trust Estate or the
business or condition (financial or otherwise) of the
Originator or impair the enforceability of any Lease).
2.02 Business and Property.
The Prospectus and the Prospectus Supplement accurately describe in
all material respects the general nature of the business of the Originator.
2.03 Financial Statements.
(a) The consolidated balance sheet of the Originator and its
consolidated subsidiaries for the fiscal periods ended September 30, 1998 and
September 30, 1997 and the related consolidated statements of income, retained
earnings and cash flow for the respective period and fiscal years ended on such
dates, all accompanied by reports thereon containing opinions without
qualification, except as therein noted, by [Ernst & Xxxxx], independent
certified public accountants, and the unaudited interim consolidated balance
sheet of the Originator and its consolidated subsidiaries as of December 31,
1998 and the related consolidated statements of income, retained earnings and
cash flow for the three months ended on such date have been prepared in
accordance with generally accepted accounting principles consistently applied,
and present fairly the financial position of the Originator and its subsidiaries
as of such dates and the results of their operations for such periods.
(b) Except as disclosed in the Prospectus, the Prospectus Supplement
and the financial statements referred to in the preceding Section 2.03(a), since
September 30, 1998 there has been no change in the business, condition or
prospects (financial or otherwise) of the Originator except changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse. Neither the Originator nor any of its subsidiaries has
any material liabilities or obligations not incurred in the ordinary course of
business other than those disclosed in the financial statements referred to in
Section 2.03(a) or for which adequate reserves are reflected in such financial
statements.
2.04 Equipment and Leases.
(a) Prior to the date of each contribution and transfer of any
Leases and Equipment in accordance with Sections 1.01 and 1.02, respectively,
the Originator purchased each item of Equipment from [either (i) the
manufacturer or other supplier following receipt of an invoice from such
manufacturer or supplier or (ii) a Lessee following confirmation that such item
of Equipment was on such Lessee's premises]. The Originator has paid in full, to
the manufacturer or supplier [or Lessee], as the case may be, the purchase price
and any related charges in connection with the acquisition of the Equipment. The
contribution to the Seller and the contribution to the Issuer of the Leases and
the contribution of all of the Originator's right, title and interest in each
item of Equipment to the Seller and the subsequent contribution of the
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Seller's interests (other than its ownership interest) in each item of Equipment
to the Issuer, does not violate the terms or provisions of any Lease or any
other agreement to which the Originator is a party or by which it is bound.
(b) Upon completion of the transfers described in Article I hereof,
the Issuer will (i) be the legal owner of the Leases (including the right to
receive all payments due or to become due thereunder), (ii) have good title to
its interest in each item of the Equipment subject to any Lease [other than a
Nominal Buy-Out Lease], and (iii) have a valid security interest in each item of
Equipment subject to any Lease [other than a Nominal Buy-Out Lease]. At such
time, the Leases (including the right to receive all payments due or to become
due thereunder) and the Originator's interest in the Equipment will be free and
clear of all Liens other than the rights of each Lessee under the Lease to which
such Lessee is a party and the Lien created by the Indenture; and there will be
no delinquent taxes or other outstanding charges affecting the Equipment which
are or may be Liens prior to, or equal or coordinate with, the Lien of the
Trustee under the Indenture.
(c) At the time of each transfer of a Lease hereunder, each such
Lease (i) is or will be a triple-net lease; (ii) is or will be a legal, valid
and binding full recourse obligation of the Lessee thereunder, enforceable by
the Issuer (and by the Trustee as assignee of the Issuer) against such Lessee in
accordance with the terms thereof, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws relating to or
affecting the enforcement of creditors' rights and by general equity principles,
is noncancellable by the Lessee and is in full force and effect, and any and all
requirements of any federal, state or local law, including, without limitation,
usury, truth-in-lending and equal credit opportunity laws applicable to each
Lease have been complied with; and (iii) the Originator has no knowledge (after
due inquiry) of any challenge, dispute or claim by or against the Lessee under
or affecting any Lease. As of the initial Determination Date, or the effective
date of the transfer of any Additional Lease or Substitute Lease, each Lessee
has paid at least one installment of rent under its respective Lease.
(d) At the time that any item of Equipment (including the
Originator's security interest in any item not owned by it) is contributed
hereunder, the Originator will have no knowledge that any item of the Equipment
has suffered any loss or damage which has not been repaired.
(e) Each Lease requires the Lessee thereunder to maintain insurance
on the Equipment subject thereto in an amount at least equal to the fair market
value thereof.
(f) In addition to the insurance maintained by the Lessees with
respect to the Equipment, the Originator (or an Affiliate of the Originator)
maintains (i) one or more casualty insurance policies which, in the aggregate,
are in an amount not less than the aggregate Outstanding Principal Amount of the
Notes, (ii) a general liability insurance policy in the aggregate amount of
$1,000,000 and (iii) an excess liability insurance policy in umbrella form in
the aggregate amount of $10,000,000. Each of such policies is in full force and
effect and covers all equipment owned by the Originator and the Seller. All
premiums in respect of such policies have been paid. Each of the Trustee and the
Issuer are named as loss payees and additional
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insureds, as their interests may appear, on such casualty and liability policies
maintained by the Originator.
(g) At the time of each transfer of a Lease hereunder, no Lease had
outstanding rent which was 60 or more days past due as of the Cut-Off Date.
(h) Each Lease was entered into or acquired by the Originator in
accordance with the Originator's regular credit approval process described in
the Prospectus and the Prospectus Supplement, and no selection procedures
adverse to the credit quality of the Leases were employed in selecting the
Leases for contribution under this Assignment and Servicing Agreement.
(i) The obligation of each Lessee to pay rent under each of the
Leases throughout the term thereof is and will be unconditional, without any
right of setoff by such Lessee and without regard to any event affecting the
Equipment, the obsolescence of any Equipment, any claim of such Lessee against
the Issuer, the Originator or the Servicer or any change in circumstance of such
Lessee or any other circumstance whatsoever except to the extent that in the
event of a casualty of any item of Equipment, the Lessee, at a minimum, is
obligated to pay, in lieu of the future Lease Payments with respect to such
item, the outstanding principal or net book value of the Leases and any
applicable make whole premium.
(j) In the case of each Lease which consists of a master lease and
one or more exhibits or schedules thereto, the Originator has neither assigned
such master lease in its entirety, nor delivered physical possession of such
master lease, to any Person other than the Seller, the Issuer or the Trustee
(including the Trustee under another indenture in a transaction substantially
similar to the transaction contemplated hereby, which other indenture provides
that the lien thereof on such master lease extends only to such master lease
insofar as it relates to lease schedules which are not part of the Trust
Estate).
(k) As of the time of each transfer of Leases and Equipment
hereunder, there are no facts or circumstances which give rise, or would give
rise at any time in the future, to any right of rescission, setoff, counterclaim
or defense, including the defense of usury, to obligations of any Lessee,
including the obligation of such Lessee to pay all amounts due with respect to
any Lease to which such Lessee is a party, and neither the operation of any of
the terms of any Lease or the exercise of any right thereunder will render such
Lease unenforceable in whole or in part or subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and no such
right of rescission, setoff, counterclaim or defense has been asserted with
respect thereto.
(l) As of the time of each transfer of Leases and Equipment
hereunder, no Lease has been amended, altered or modified in any respect, except
in writing and copies of all such writings are attached to the Lease delivered
to the Trustee.
(m) As of the time of each transfer of Leases and Equipment
hereunder, no Lessee will have been released, in whole or in part, from any of
its obligations in respect of any Lease; no Lease will have been satisfied,
cancelled or subordinated, in whole, or in part, or rescinded, and no Equipment
covered by any Lease will have been released from such Lease, in
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whole or in part, nor has any instrument been executed that would effect any
such satisfaction, release, cancellation, subordination or rescission.
(n) As of the time of each transfer of Leases and Equipment
hereunder, each Lease was either (i) originated by the Originator in the
ordinary course of its business or (ii) acquired by the Originator for value and
taken into possession prior to the Cut-Off Date in the ordinary course of its
business.
(o) The Leases do not materially violate any U.S. or state laws and
no Lease was originated in or is subject to the laws of any jurisdiction whose
laws would make any of the transfers and contributions under this Assignment and
Servicing Agreement unlawful.
(p) All parties to each Lease had authority and capacity to execute
such Lease.
(q) None of the Leases is a consumer lease and each Lessee has
accepted the Equipment leased to it.
(r) The Booked Residual Value of the Equipment as of the Cut-Off
Date equals [$ ].
(s) All parties to each Lease had all requisite authority and
capacity to execute such Lease.
(t) As of the Cut-Off Date, the Final Lease Payment on each Lease
was due and payable on or prior to [ ].
(u) Each Lease agreement is "chattel paper" within the meaning of
The Uniform Commercial Code in the states of [New York and Georgia].
(v) Each Lease is noncancellable by the Lessee and none of the
Leases contain early termination options (except for Leases which contain early
termination or prepayment clauses, which require the Lessee to pay the remainder
of all remaining Scheduled Payments under such Lease upon such cancellation or
prepayment);
(w) None of the Leases are subject to any guaranty by the
Originator.
(x) No adverse selection was used in selecting the Lease for
transfer to the Issuer.
(y) The Leases have been sold to the Issuer free and clear of any
liens and are assignable without prior written consent of the Lessee.
(z) The Leases are U.S. dollar-denominated and the Lessor and each
Lessee are located in the United States.
(aa) No more than three percent (3%) of the Leases in any Asset Pool
will consist of Leases with government entities as the obligor.
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(bb) Each Lessee has represented to the Originator that it has
accepted the Equipment.
(cc) No Lessee is a subject of an insolvency or bankruptcy
proceeding at the time of the transfer.
(dd) No Lease is a Defaulted Lease.
(ee) The maximum remaining term of any Lease shall not exceed [ ]
months ("Maximum Lease Term").
(ff) Each Lease provides for periodic payments.
(gg) All the Leases were originated in the United States.
2.05 Payments.
(a) The aggregate amounts of Lease Payments payable by the Lessees
under the Leases during each lease payment period, including amounts on deposit
in the Reserve Account, are sufficient to cover the Servicing Fee and pay the
principal and interest on the Receivable Notes, as such payments become due and
payable.
(b) The portfolio detail delivered or to be delivered to the Trustee
on or prior to the Issuance Date (i) accurately sets forth, as of the Cut-Off
Date, the amount of each Lease Payment due under each of the Leases and the
month in which such Lease Payment is to be paid in accordance with the terms of
the Lease under which the same is to be paid, (ii) accurately sets forth, as of
the Cut-Off Date, the information with respect to certain other characteristics
of the Leases and the Equipment described in such portfolio detail and (iii) is
otherwise true and correct in all respects.
2.06 Full Disclosure.
The Prospectus, the Prospectus Supplement (including, without
limitation, the statistical and descriptive information with respect to the
initial Leases, Lessees and Equipment), as of their respective dates, do not
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no fact
peculiar to the Originator or any Affiliate of the Originator or, to the
knowledge of the Originator, any Lease, Lessee or item of Equipment, which the
Originator has not or will not disclose in the Prospectus which materially
affects adversely nor, so far as the Originator can now reasonably foresee, will
materially affect adversely the ability of the Originator to perform the
transactions contemplated by this Assignment and Servicing Agreement.
2.07 Pending Litigation.
There are no proceedings or investigations pending, or to the
knowledge (after due inquiry) of the Originator threatened, against or affecting
the Originator or any subsidiary in
9
or before any court, governmental authority or agency or arbitration board or
tribunal, including, but not limited to, any such proceeding or investigation
with respect to any environmental or other liability resulting from the
ownership or use of any of the Equipment, which, individually or in the
aggregate, involve the possibility of materially and adversely affecting the
properties, business, prospects, profits or condition (financial or otherwise)
of the Originator and its subsidiaries, or the ability of the Originator or the
Servicer to perform its obligations under this Assignment and Servicing
Agreement. The Originator is not in default with respect to any order of any
court, governmental authority or agency or arbitration board or tribunal.
2.08 Title to Properties.
Immediately following the transfer and contribution by the
Originator to the Seller of the Leases and the Originator's interest in the
Equipment, and then the transfer and contribution by the Seller to the Issuer of
the Leases and the Seller's interests (other than its ownership interest) in the
Equipment, the Leases (including the right to receive all payments due or to
become due thereunder) and the interest in the Equipment will be free and clear
of all Liens, except the Lien on the Trust Estate in favor of the Trustee
granted pursuant to the Indenture (or the Lien in favor of the Issuer which is
assigned to the Trustee pursuant to the Indenture).
2.09 Transactions Legal and Authorized.
The transfer and contribution by the Originator of all of its right,
title and interest in and to each item of Equipment and each Lease (including
the right to receive all payments due or to become due thereunder) and
compliance by the Originator with all of the provisions of this Assignment and
Servicing Agreement:
(a) have been duly authorized by all necessary corporate action on
the part of the Originator, and do not require any stockholder approval, or
approval or consent of any trustee or holders of any indebtedness or obligations
of the Originator except such as have been duly obtained;
(b) are within the corporate powers of the Originator; and
(c) are legal and will not conflict with, result in any breach in
any of the provisions of, constitute a default under, or result in the creation
of any Lien upon any property of the Originator under the provisions of, any
agreement, charter instrument, by-law or other instrument to which the
Originator is a party or by which it or its property may be bound or result in
the violation of any law, regulation, rule, order or judgment applicable to the
Originator or its properties, or any order to which the Originator or its
properties is subject, of or by any government or governmental agency or
authority.
2.10 Governmental Consent.
No consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority is necessary or required on the
part of the Originator in connection with the execution and delivery of this
Assignment and Servicing Agreement or the contribution of the Leases and
Equipment or the performance of its obligations as Servicer.
10
2.11 Taxes.
(a) All tax returns required to be filed by the Originator or any
subsidiary in any jurisdiction have in fact been filed, and all taxes,
assessments, fees and other governmental charges upon the Originator or any
subsidiary, or upon any of their respective properties, income or franchises,
shown to be due and payable on such returns have been paid. To the best of the
Originator's knowledge all such tax returns were true and correct and neither
the Originator nor any subsidiary knows of any proposed additional tax
assessment against it in any material amount nor of any basis therefor.
(b) The provisions for taxes on the books of the Originator and each
of its subsidiaries are in accordance with generally accepted accounting
principles.
2.12 Compliance with Law.
The Originator:
(a) is not in violation of any laws, ordinances,
governmental rules or regulations to which it is
subject;
(b) has not failed to obtain any licenses, permits,
franchises or other governmental authorizations
necessary to the ownership of its property or to the
conduct of its business; and
(c) is not in violation in any material respect of any term
of any agreement, charter instrument, by-law or other
instrument to which it is a party or by which it may be
bound, which violation or failure to obtain might
materially adversely affect the business or condition
(financial or otherwise) of the Originator and its
subsidiaries.
2.13 ERISA.
(a) The present value of all benefits vested under all "employee
pension benefit plans," as such term is defined in Section 3 of ERISA,
maintained by or contributed to by the Originator and its Related Persons (other
than multi-employer plans as such term is defined in Section 3 of ERISA), as
from time to time in effect (herein called the "Pension Plans"), does not exceed
the value of the assets of the Pension Plans allocable to such vested benefits;
(b) No Prohibited Transactions, Accumulated Funding Deficiencies,
Withdrawals or Reportable Events have occurred with respect to any Pension Plans
that, in the aggregate, could subject the Originator to any material tax,
penalty or other liability; and
(c) No notice of intent to terminate a Pension Plan under a distress
termination has been filed, nor has the PBGC instituted proceedings to
terminate, or appoint a trustee to administer, a Pension Plan and no event has
occurred or condition exists which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan.
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2.14 Ability to Perform.
At the date hereof, the Originator does not believe, nor does it
have any reasonable cause to believe, that it cannot perform each and every
covenant contained in this Assignment and Servicing Agreement or its ability to
perform as Servicer.
2.15 Ordinary Course; No Insolvency.
The transactions contemplated by the Notes, the Indenture and this
Assignment and Servicing Agreement are being consummated by the Originator in
furtherance of the Originator's ordinary business purposes and constitute a
practical and reasonable course of action by the Originator designed to improve
the financial position of the Originator, with no contemplation of insolvency
and with no intent to hinder, delay or defraud any of its present or future
creditors. The Originator will not, either as a result of the transaction
contemplated by this Assignment and Servicing Agreement, or immediately before
or after such transaction, be insolvent or have an unreasonably small capital
for the conduct of its business and the payment of anticipated obligations.
2.16 Assets and Liabilities.
(a) Both immediately before and after any transfer and contribution
of Leases (including the right to receive all payments due or to become due
thereunder) and the transfer and contribution of the interests in the Equipment
contemplated by this Assignment and Servicing Agreement, the present fair
salable value of the Originator's assets was or will be in excess of the amount
that will be required to pay the Originator's probable liabilities as they then
exist and as they become absolute and matured; and
(b) Both immediately before and after any transfer and contribution
of Leases (including the right to receive all payments due or to become due
thereunder) and the transfer and contribution of the interests in the Equipment
contemplated by this Assignment and Servicing Agreement, the sum of the
Originator's assets was or will be greater than the sum of the Originator's
debts, valuing the Originator's assets at a fair salable value.
2.17 Fair Consideration.
The consideration received by the Originator, in exchange for the
contribution of the Leases (including the right to receive all payments due or
to become due thereunder) and the contribution of its interests in the
Equipment, is fair consideration having value equivalent to or in excess of the
value of the assets being contributed by the Originator.
2.18 Ability to Pay Debts.
Neither as a result of the transaction contemplated by this
Assignment and Servicing Agreement nor otherwise does the Originator believe
that it will incur debts beyond its ability to pay or which would be prohibited
by its charter documents or by-laws. The Originator's assets and cash flow
enable it to meet its present obligations in the ordinary course of business as
they become due.
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2.19 Bulk Transfer Provisions.
The contribution, transfer, assignment and conveyance of the Leases
and its interests in the Equipment by the Originator pursuant to this Assignment
and Servicing Agreement is not subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction.
2.20 Transfer Taxes.
The contribution, transfer, assignment and conveyance of the Leases
(including all payments due or to become due thereunder) and its interests in
the Equipment by the Originator pursuant to this Assignment and Servicing
Agreement is not subject to and will not result in any tax, fee or governmental
charge payable by the Originator to any federal, state or local government
("Transfer Taxes"). In the event that the Issuer receives actual notice of any
Transfer Taxes arising out of the transfer, assignment and conveyance of the
Leases and/or its interests in the Equipment, on written demand by the Issuer,
or upon the Originator otherwise being given notice thereof, the Originator
shall pay, and otherwise indemnify and hold the Issuer, the Trustee and the
holders of the Notes harmless, on an after-tax basis, from and against any and
all such Transfer Taxes (it being understood that the holders of the Notes and
the Trustee shall have no obligation to pay such Transfer Taxes).
2.21 Principal Executive Office.
The principal executive office of each of the Originator and the
Servicer is located at 0000 Xxxx Xxxx, X.X. Box 9115, Macon, Georgia 31210.
2.22 Servicing Provisions Customary.
The servicing arrangements hereunder, including without limitation
the terms and conditions pursuant to which the Originator will act as Servicer
and the Servicing Fee to be paid to the Originator, are consistent with the
arrangements and customary practices of the Originator when providing comparable
services to non-affiliated entities and of other servicers in the equipment
leasing industry.
2.23 Nonconsolidation.
The Originator is and at all times since its incorporation has been
operated in such a manner that it would not be substantively consolidated with
either the Seller or the Issuer, such that the separate existence of the
Originator and the Seller or the Issuer would be disregarded in the event of a
bankruptcy or insolvency of the Originator or the Seller or the Issuer, and in
such regard:
(a) the Originator is not involved in the day-to-day management of
the Seller or the Issuer;
(b) the Originator maintains separate corporate records and books of
account from the Seller and the Issuer and otherwise observes corporate
formalities and has a separate business office from the Seller and the Issuer;
13
(c) the financial statements and books and records of the Originator
prepared after the Issuance Date will reflect the separate existence of the
Seller and the Issuer;
(d) the Originator maintains its assets separately from the assets
of the Seller and the Issuer (including through the maintenance of a separate
bank account), the Originator's funds and assets, and records relating thereto,
have not been and are not commingled with those of the Seller and the Issuer and
the separate creditors of the Seller and the Issuer will be entitled to be
satisfied out of the Seller's and the Issuer's assets prior to any value in the
Seller or the Issuer becoming available to the Seller or the Issuer's
equityholders or the Originator's creditors;
(e) all business correspondence of the Originator and other
communications are conducted in the Originator's own name and on its own
stationery; and
(f) neither the Seller or the Issuer acts as an agent of the
Originator in any capacity and the Originator does not act as agent for the
Seller or the Issuer, but instead presents itself to the public as a corporation
separate from the Seller and the Issuer; provided that the Originator is the
Servicer hereunder and under agreements substantially the same as this
Agreement.
2.24 Capital Contribution Treatment.
The Originator will treat the transfer to the Seller of the Leases,
the Lease Receivables and its interest in the Equipment as a capital
contribution for reporting and accounting purposes.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants as follows:
3.01 Corporate Organization and Authority.
The Seller:
(a) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of
organization,
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties
and to carry on its business as now conducted and to
enter into and perform its obligations under this
Assignment and Servicing Agreement, and the transactions
contemplated hereby [including its support obligations
hereunder], and
(c) has duly qualified and is authorized to do business and
is in good standing as a foreign corporation in each
jurisdiction where the character of its properties or
the nature of its activities makes such qualification
necessary.
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3.02 Business and Property.
The Prospectus accurately describes, in all material respects, the
general nature of the business of the Seller.
3.03 Ownership and Security Interest.
Upon completion of the transfers described in Article I hereof, the
Issuer will (i) be the legal owner of the Leases (including the right to receive
all payments due or to become due thereunder), (ii) have good title to its
interest in each item of the Equipment subject to any Lease [other than a
Nominal Buy-Out Lease], and (iii) have a valid security interest in each item of
Equipment subject to any Lease [other than a Nominal Buy-Out Lease]. At such
time, the Leases (including the right to receive all payments due or to become
due thereunder) and the Originator's interest in the Equipment will be free and
clear of all Liens other than the rights of each Lessee under the Lease to which
such Lessee is a party and the Lien created by the Indenture; and there will be
no delinquent taxes or other outstanding charges affecting the Equipment which
are or may be Liens prior to, or equal or coordinate with, the Lien of the
Trustee under the Indenture.
3.04 Transactions Legal and Authorized.
The contribution by the Seller of all of its right, title and
interest (other than its ownership interest) in and to each item of Equipment,
each Lease (including the right to receive all payments due or to become due
thereunder) and the contribution and assignment of the covenants,
representations, warranties and obligations of the Originator (including the
Originator's Purchase Obligation) under this Assignment and Servicing Agreement
and compliance by the Seller with all of the provisions of this Assignment and
Servicing Agreement:
(a) have been duly authorized by all necessary corporate action on
the part of the Seller, and do not require any stockholder approval, or approval
or consent of any trustee or holders of any indebtedness or obligations of the
Seller except such as have been duly obtained;
(b) are within the corporate powers of the Seller; and
(c) are legal and will not conflict with, result in any breach in
any of the provisions of, constitute a default under, or result in the creation
of any Lien upon any property of the Seller under the provisions of, any
agreement, charter instrument, by-law or other instrument to which the Seller is
a party or by which it or its property may be bound or result in the violation
of any law, regulation, rule, order or judgment applicable to the Seller or its
properties, or any order to which the Seller or its properties is subject, of or
by any government or governmental agency or authority.
3.05 Governmental Consent.
No consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority is necessary or required on the
part of the Seller in connection with the execution and delivery of this
Assignment and Servicing Agreement or the contribution of the Leases and the
Equipment.
15
3.06 Compliance with Law.
The Seller:
(a) is not in violation of any laws, ordinances,
governmental rules or regulations to which it is
subject;
(b) has not failed to obtain any licenses, permits,
franchises or other governmental authorizations
necessary to the ownership of its property or to the
conduct of its business; and
(c) is not in violation in any material respect of any term
of any agreement, charter instrument, by-law or other
instrument to which it is a party or by which it may be
bound, which violation or failure to obtain might
materially adversely affect the business or condition
(financial or otherwise) of the Seller and its
subsidiaries.
3.07 Assets and Liabilities.
(a) Both immediately before and after any contribution of Leases
(including the right to receive all payments due or to become due thereunder)
and the contribution of the interests in the Equipment contemplated by this
Assignment and Servicing Agreement, the present fair salable value of the
Seller's assets was or will be in excess of the amount that will be required to
pay the Seller's probable liabilities as they then exist and as they become
absolute and matured; and
(b) Both immediately before and after any contribution of Leases
(including the right to receive all payments due or to become due thereunder)
and the contribution of the interests in the Equipment contemplated by this
Assignment and Servicing Agreement, the sum of the Seller's assets was or will
be greater than the sum of the Seller's debts, valuing the Seller's assets at a
fair salable value.
3.08 Fair Consideration.
The consideration received by the Seller, in exchange for the
contribution of the Leases (including the right to receive all payments due or
to become due thereunder) and the contribution of its interests (other than its
ownership interest) in the Equipment, and the assignment and contribution of the
covenants, representations, warranties and obligations of the Originator
(including the Originator's Purchase Obligation) under this Assignment and
Servicing Agreement is fair consideration having value equivalent to or in
excess of the value of the assets being contributed by the Seller.
3.09 Ability to Pay Debts.
Neither as a result of the transaction contemplated by this
Assignment and Servicing Agreement nor otherwise does the Seller believe that it
will incur debts beyond its ability to pay or which would be prohibited by its
charter documents or by-laws. The Seller's
16
assets and cash flow enable it to meet its present obligations in the ordinary
course of business as they become due.
3.10 Bulk Transfer Provisions.
The contribution, transfer, assignment and conveyance of the Leases
and its interests in the Equipment by the Seller pursuant to this Assignment and
Servicing Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
3.11 Transfer Taxes.
The contribution, transfer, assignment and conveyance of the Leases
(including all payments due or to become due thereunder) and its interests
(other than its ownership interest) in the Equipment by the Seller pursuant to
this Assignment and Servicing Agreement is not subject to and will not result in
any tax, fee or governmental charge payable by the Seller to any federal, state
or local government ("Transfer Taxes"). In the event that the Issuer receives
actual notice of any Transfer Taxes arising out of the contribution, assignment
and conveyance of the Leases and/or the Seller's interests (other than its
ownership interest) in the Equipment, on written demand by the Issuer, or upon
the Seller otherwise being given notice thereof, the Seller shall pay, and
otherwise indemnify and hold the Issuer, the Trustee and the holders of the
Notes harmless, on an after-tax basis, from and against any and all such
Transfer Taxes (it being understood that the holders of the Notes and the
Trustee shall have no obligation to pay such Transfer Taxes).
3.12 Principal Executive Office.
The principal executive offices of the Originator and the Seller are located at
0000 Xxxx Xxxx, P.O. Box 9115, Macon, Georgia 31208 and 000 Xxxxxxxxxx Xxxx,
Xxxxx 00, Xxxxxxxxxx, XX 00000, respectively.
3.13 Nonconsolidation.
The Seller is and at all times since its incorporation has been
operated in such a manner that it would not be substantively consolidated with
the Issuer, such that the separate existence of the Seller and the Issuer would
be disregarded in the event of a bankruptcy or insolvency of the Seller or the
Issuer, and in such regard:
(a) the Seller is not involved in the day-to-day management of the
Issuer;
(b) the Seller maintains separate corporate records and books of
account from the Issuer and otherwise observes corporate formalities and has a
separate business office from the Issuer;
(c) the financial statements and books and records of the Seller
prepared after the Issuance Date will reflect the separate existence of the
Issuer;
17
(d) the Seller maintains its assets separately from the assets of
the Issuer (including through the maintenance of a separate bank account), the
Seller's funds and assets, and records relating thereto, have not been and are
not commingled with those of the Issuer and the separate creditors of the Issuer
will be entitled to be satisfied out of the Issuer's assets prior to any value
in the Issuer becoming available to the Issuer's equityholders or the Seller's
creditors;
(e) all business correspondence of the Seller and other
communications are conducted in the Seller's own name and on its own stationery;
and
(f) the Issuer does not act as an agent of the Seller in any
capacity and the Seller does not act as agent for the Issuer, but instead
presents itself to the public as a corporation separate from the Issuer.
3.14 Capital Contribution Treatment.
The Seller will treat the transfer to the Issuer of the Leases and
the Lease Receivables and of its interests (other than its ownership interest)
in the Equipment as a capital contribution for tax, reporting and accounting
purposes.
SECTION 4. ADMINISTRATION OF LEASES
4.01 Servicer to Act.
(a) Notwithstanding the contribution and assignments of the Leases
(including the right to receive all payments due or to become due thereunder)
and the related interests in the Equipment contemplated hereby, the Servicer,
for the benefit of the Issuer, will service and administer each Lease in
accordance with the terms thereof and of this Assignment and Servicing
Agreement. The Servicer shall take, or cause to be taken, all such actions as
may be necessary or advisable to service, administer and collect each Lease from
time to time, all in accordance with (i) customary and prudent servicing
procedures for leases of a similar type, (ii) all applicable laws, rules and
regulations, and (iii) without limitation as to its obligations under the
preceding clauses (i) and (ii), no less a standard of care than that which it
applies to Leases it services for its own account. The Servicer shall provide
the Lessees with appropriate invoices and such other notices as may be required
to ensure that all Lease Payments, Casualty Payments and Termination Payments on
or in respect of each Lease are remitted by the Lessees to the address specified
by the Servicer. The Servicer shall deposit such payments to the Collection
Account, as applicable, within two Business Days of the receipt thereof. Any
other amount received by the Servicer from time to time from the Originator, the
Issuer or any Lessee which is or is intended to be subject to the Lien of the
Indenture shall be held in trust by the Servicer, as agent for the Trustee and
promptly turned over to the Trustee or deposited into the Collection Account for
application in accordance with the provisions of the Indenture.
(b) The Servicer shall do, and shall have full power and authority
to do, subject only to the specific requirements and prohibitions of this
Assignment and Servicing Agreement, any and all things in connection with the
servicing and administration of the Leases and the interests in the Equipment
which are consistent with the manner in which it services leases and equipment
constituting part of its own portfolio and consistent with the customary
practices of servicers in the equipment leasing industry, but in performing its
duties hereunder,
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the Servicer will act on behalf and for the benefit of the Issuer, the Trustee
and the holders of the Notes, subject at all times to the provisions of the
Indenture, without regard to any relationship which the Servicer or any
Affiliate of the Servicer may otherwise have with a Lessee. The Servicer shall
at all times act in accordance with the provisions of each Lease, and shall
observe and comply with all requirements of law applicable to it. Except as
permitted by the terms of any Lease following a default thereunder, the Servicer
shall not take any action which would result in the interference with the
Lessee's right to quiet enjoyment of the Equipment subject to the Lease during
the term thereof. The Servicer shall exercise with respect to each item of
Equipment all rights and remedies it, the Issuer or the Trustee shall have
against any vendor of the Equipment, subject to the provisions of any Lease, and
shall promptly pay all amounts realized from such actions to the Trustee for
deposit in the Collection Account, in accordance with the terms of the
Indenture.
(c) Without limiting the generality of the foregoing, the Servicer
agrees to (i) invoice each Lessee monthly (except quarterly, semi-annually or
annually in the case of Leases which provide for quarterly, semi-annual or
annual Lease Payments, respectively) for all Lease Payments required to be paid
by such Lessee in such manner and to the same extent as the Servicer does with
respect to leases held for its own account, (ii) maintain with respect to each
Lease and each item of Equipment, and with respect to each payment by each
Lessee and compliance by each Lessee with the provisions of each Lease, complete
and accurate records in the same form and to the same extent as the Servicer
does with respect to leases and equipment held for its own account (which
records shall be at least as complete and accurate as those maintained by the
Servicer as of the date of this Assignment and Servicing Agreement), and (iii)
from time to time execute, deliver and file (or cause the same to be done), and
the Servicer is hereby authorized and empowered to execute, deliver, and file on
behalf of the Issuer and the Trustee, any and all tax returns with respect to
sales, use, personal property and other taxes (other than corporate income tax
returns) and any and all reports or licensing applications required to be filed
in any jurisdiction with respect to any Lease or any item of Equipment [and any
and all required Financing Statements and assignments of Financing Statements
and such additional Financing Statements and continuation statements with
respect thereto as may from time to time be necessary because of Lease
substitutions, equipment replacements in accordance with the provisions of any
Lease or otherwise so that the security interest contemplated by the Indenture
in favor of the Trustee in each of the Leases, at all times will be perfected by
such filings with the appropriate Uniform Commercial Code filing offices]. The
Originator and the Servicer agree to file Financing Statements on Form UCC-1 to
perfect the security interest of the Trustee in the Leases and the Lease
Payments, and to the extent provided herein, the Equipment.
(d) The Servicer will maintain, or cause to be maintained, with
respect to the Leases and the Equipment casualty and liability insurance in
amounts at least as great as those described in Section 2.04(f). Each such
casualty and liability policy (i) if maintained by the Servicer, shall name the
Issuer and Trustee as loss payees or additional insureds and (ii) if maintained
by the Lessee, shall name the Servicer or the Trustee as loss payee and
additional insured; provided that the Servicer shall cause all such policies to
name the Trustee and the Issuer as loss payees and additional insureds if (A)
the Originator is no longer the Servicer, (B) an Event of Default shall have
occurred and be continuing or (C) a Servicer Event of Default shall have
occurred and be continuing.
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(e) On or prior to the Issuance Date, the Servicer will file the
Financing Statements and assignments of Financing Statements in accordance with
the Filing Requirements and thereafter will file such additional Financing
Statements and continuation statements and assignments with respect to the
Leases as may be necessary because of equipment replacements in accordance with
the provisions of any Lease, purchases of Additional Leases in accordance with
Section 11 and Lease substitutions pursuant to Section 11 hereof or otherwise so
that (i) the ownership interest contemplated by this Agreement in favor of the
Issuer and the security interest contemplated by the Indenture in favor of the
Trustee in each of the Leases and the Equipment will be perfected by such
filings with the appropriate Uniform Commercial Code filing offices (to the
extent this may be achieved by central filing), and (ii) the security interest
contemplated by the Assignment and Servicing Agreement in favor of the Seller
and the Issuer in each of the Leases and Equipment will be perfected by such
filings with the appropriate Uniform Commercial Code filing offices (to the
extent this may be achieved by central filing).
(f) The Servicer shall pay the Excess Copy Charges, Maintenance
Charges and Fee Per Scan Charges, if any, owing the related vendor in a timely
fashion.
4.02 Lease Amendments and Modifications.
In performing its obligations hereunder, the Servicer may, acting in
the name of the Issuer and without the necessity of obtaining the prior consent
of the Issuer or the Trustee, enter into and grant modifications, waivers and
amendments to the terms of any Lease except for modifications, waivers or
amendments that (a) are inconsistent with the servicing standards set forth in
Section 4.01 above, (b) would reduce the amount or extend the time for payment
of any Lease Payment, Casualty Payment, Termination Payment to be made under a
Lease (other than to permit termination of a Lease which does not otherwise
provide for termination by requiring the payment, in lieu of all future Lease
Payments with respect to the Lease or Equipment subject thereto, an amount which
equals or exceeds the Lease Purchase Amount for such Lease as of such date) or
the Lessee's absolute and unconditional obligation to make payment of the same,
(c) would reduce or adversely affect the Lessee's obligation to maintain,
service, insure and care for the Equipment or would permit the alteration of any
item of Equipment in any way which could adversely affect its present or future
value or (d) otherwise could adversely affect the interests of any of the
Issuer, the Trustee or the holders of the Notes.
In addition, following the transfer of any Lease to the Issuer in
accordance herewith, the Servicer may make adjustments to such Lease which
modify one or more terms of such Lease, such as payment amount or payment date.
Such administrative adjustments may result in a re-booking of such Lease and the
assignment of a new Lease number, but will not be considered to be a
substitution or prepayment of such Lease. Except to the extent the Originator
substitutes a Substitute Lease therefor in accordance with Section 11 hereof,
the Servicer may permit such adjustments so long as the following conditions
precedent have been satisfied:
(i) after giving effect to such adjustments and any additions
and substitutions pursuant to Section 11, the aggregate Booked Residual Value of
such Leases will not be less than 100% of the aggregate Booked Residual Value of
the Leases adjusted, replaced or substituted since the Issuance Date.]
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(ii) after giving effect to such adjustment and any additions
and substitutions pursuant to Section 11, the final payment on such Lease must
be on or prior to [ ].
(iii) after giving effect to such adjustments and any
additions and substitutions pursuant to Section 11 the aggregate amount of Lease
Payments through the term of the Leases (including the Substitute Leases and the
Additional Leases) will not be materially less than the aggregate scheduled
Lease Payments of the Leases prior to such adjustment, substitution or addition.
(iv) after giving effect to such adjustments, additions and
substitutions pursuant to Section 11, the Discounted Present Value of the
Performing Leases must not be less than the Discounted Present Value of the
Performing Leases prior to such adjustment, addition and substitution.
(v) after giving effect to such adjustments, additions, and
substitutions pursuant to Section 11, the weighted average remaining term of the
Performing Leases must not be greater than the weighted average remaining term
of the Performing Leases prior to such adjustment, addition, and substitution.
4.03 Defaulted Leases.
(a) Upon receipt of notice from the Issuer, the Trustee or any other
Person, or if the Servicer otherwise learns that any Lease is a Defaulted Lease,
the Servicer will take such action as is appropriate, consistent with the
Servicer's administration of leases in its own portfolio and consistent with the
customary practices of servicers in the equipment leasing industry, including
such action as may be necessary to cause, or attempt to cause, the Lessee
thereunder to cure such non-performance (if the same may be cured) or to
terminate or attempt to terminate such Lease and to recover, or attempt to
recover, all damages resulting from such default. The Servicer shall demand, on
behalf of the Issuer, that the Originator immediately repay any Inter-Company
Loan representing the advance pursuant to Section 15.01 hereof of any security
deposit with respect to any Lease which becomes a Defaulted Lease, and the
Servicer shall apply such security deposit in accordance with Section 4.03(d)
hereof.
(b) The Servicer will use its best efforts to sell or lease any
Equipment upon the expiration or early termination of a Lease or that is subject
to a Defaulted Lease in a timely manner and upon the most favorable terms and
conditions available at the time. In the event of an Early Lease Termination,
any Substitute Lease must have a Discounted Present Value equal to or greater
than that of the Terminated Lease, monthly payments at least equal to those of
the Terminated Lease through the remaining term of such Terminated Lease, a
remaining term less than or equal to that of the Terminated Lease and a Booked
Residual Value at least equal to that of such Terminated Lease.
(c) In the event that the Servicer is required to sell or lease any
item of Equipment pursuant to the provisions of this Section 4.03 at a time when
the Servicer has other similar items of equipment available to it, the Servicer
will not favor any such other item in its remarketing efforts.
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(d) All amounts realized by the Servicer in the performance of its
duties hereunder with respect to any Lease or Equipment remaining subject to the
Lien of the Indenture (net of the Servicer's actual out-of-pocket expenses
reasonably incurred in such realization) shall be held in trust by the Servicer,
as agent for the Trustee and deposited into the Collection Account for
application in accordance with the provisions of the Indenture; provided that,
to the extent that (i) the Servicer has made any advances pursuant to Section
5.01 hereof with respect to any Lease which thereafter became a Defaulted Lease,
and (ii) the Servicer has not otherwise been fully reimbursed for such advances
or payments, the Servicer shall reimburse itself for such advances or payments
from any amounts recovered with respect to such Defaulted Lease before
depositing any such amounts pursuant to this Section 4.03(d).
4.04 Costs of Servicing; Servicing Fee; Administrative Expenses.
(a) All costs of servicing each Lease in the manner required by this
Section 4 shall be borne by the Servicer, but the Servicer shall be entitled to
retain, out of any amounts actually recovered by the Servicer in the performance
of its obligations under Section 4.03 hereof with respect to any Lease or the
interests in the Equipment subject thereto, the Servicer's actual out-of-pocket
expenses reasonably incurred in the course of such performance with respect to
such Lease or the interests in the Equipment. (For all purposes of this Section
4 the Servicer's "out-of-pocket expenses" means only those expenses incurred to
third parties (e.g., reasonable fees of outside counsel in a collection suit)
and not salaries, operating costs, overtime wages and other such "overhead"
costs or expenses of the Servicer.) In addition, the Servicer shall be entitled
to receive from the Issuer on each Payment Date following the Issuance Date a
servicing fee with respect to the Notes (the "Servicing Fee").
(b) The amount of the Servicing Fee which the Servicer shall be
entitled to receive on each Payment Date following the [original] issuance of
the Notes shall be determined by multiplying (i) the Discounted Present Value of
Performing Leases as of the prior Payment Date times (ii) one-twelfth of [ ]%.
(c) The Servicer agrees to pay, out of the Servicing Fee, all
Trustee's Fees and expenses in connection with the Notes (including the expenses
relating to the preparation and delivery of reports to Noteholders) and all fees
of accountants in connection with the Notes.
4.05 Other Transactions.
Nothing in this Assignment and Servicing Agreement shall preclude
the Originator or the Servicer from entering into other leases or other
financial transactions with any Lessee or selling or discounting any such lease
with any Person.
SECTION 5. SERVICER ADVANCES AND ORIGINATOR'S SUPPORT
5.01 Late Lease Payments. On each Determination Date, the Servicer
may, but will not be required to, advance and remit to the Trustee for deposit
in the Collection Account, in such manner as will ensure that the Trustee will
have immediately available funds on account thereof by 11:00 A.M. New York City
time on the second Business Day prior to the next succeeding Payment Date, an
amount (a "Servicer Advance") equal to any Lease Payment due during the prior
Lease Payment Period but unpaid prior to such Determination Date with respect
22
to any Lease. In consideration of each Servicer Advance the Servicer will be
entitled to retain any late payment fees recovered from the Lessee with respect
to any Lease Payment covered by a Servicer Advance. In addition, the Servicer
will be reimbursed for Servicer Advances from funds in the Collection Account in
accordance with the Indenture on the second following Payment Date.
5.02 Early Termination Leases.
Following the Determination Date as of which any Lease first becomes
an Early Termination Lease the Originator may, but shall have no obligation to,
either (a) substitute one or more Eligible Leases and the Equipment subject
thereto for such Lease and the Equipment subject thereto pursuant to Section 11
hereof (if the Originator is then entitled to substitute Leases and Equipment in
accordance with the provisions of Section 11.01 hereof) on or before the second
Business Day prior to the next succeeding Payment Date, [(b) purchase from the
Issuer such Lease and the related Equipment by remitting to the Trustee an
amount equal to the Lease Purchase Amount in such manner as will ensure that the
Trustee will have immediately available funds therefor by 11:00 A.M. New York
City time on the second Business Day prior to the next succeeding Payment Date]
or [(c) offer for sale] to the Issuer one or more Additional Leases in
consideration of the proceeds thereof in accordance with Section 11 hereof.
Unless the Originator takes one of the actions set forth in the prior sentence,
the Servicer will not permit a voluntary termination of a Lease prior to its
stated maturity unless it receives a payment in connection with such termination
equal to at least the Lease Purchase Amount. Any Early Termination Lease and the
Equipment subject thereto which is purchased, or for which Additional Leases
have been acquired or Substitute Leases transferred, pursuant to this Section
5.02 shall nevertheless remain subject to the Lien of the Indenture until such
time as an Additional Lease or Additional Leases have been acquired or
Substitute Lease or Substitute Leases have been transferred in accordance with
the provisions of Section 11 hereof or the Lease Purchase Amount has been paid.
A Lease will be considered to be an "Eligible Lease" if on the date such Lease
is substituted for or added in replacement of an Early Termination Lease, such
Lease satisfies the representations and warranties set forth in Section 2.04(a)
through (ee) and th requirements of Section 11 hereof.
5.03 Indemnification.
The Originator and in its capacity as Servicer, agrees to indemnify
and hold harmless the Issuer, the Servicer, the Trustee and each holder of the
Notes (each an "Indemnified Party") against any and all liabilities, losses,
damages, penalties, costs and expenses (including costs of defense and legal
fees and expenses) which may be incurred or suffered by such Indemnified Party
(except to the extent arising out of the gross negligence or willful misconduct
on the part of the Indemnified Party) as a result of claims, actions, suits or
judgments asserted or imposed against it and arising out of the transactions
contemplated hereby or by the Indenture, including, without limitation, any
claims resulting from any use, operation, maintenance, repair, storage or
transportation of any item of Equipment, whether or not in the Servicer's
possession or under its control pursuant to this Assignment and Servicing
Agreement, and any tort claims and any fines or penalties arising from any
violation of the laws or regulations of the United States or any state or local
government or governmental authority; provided that the foregoing indemnity
shall in no way be deemed to impose on the Originator any obligation, other than
to the extent
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specifically set forth in this Section 5, to make any payment with respect to
principal or interest on the Notes or to reimburse the Issuer for any payments
on account of the Notes. This Section 5.03 shall bind any successor Servicer
hereunder.
5.04 Purchases; Other Payments.
(a) In the event that (i) any of the representations or warranties
made by the Originator in Sections 2.04 and 2.05 hereof with respect to any of
the Leases or the Equipment subject thereto proves at any time to have been
inaccurate in any material respect, thus, causing a breach of such
representation or warranty to occur, as of the Issuance Date or related transfer
date, as the case may be which breach has not been cured or corrected within
[30] days after the earlier of the date on which the Originator is given notice
thereof by the Issuer or Trustee or the date on which the Originator otherwise
first discovers such breach (each such lease a "Warranty Lease") or (ii) any
Lease shall be terminated in whole or in part by a Lessee, or any amounts due
with respect to any Lease shall be reduced or impaired, as a result of any
action or inaction by the Originator (other than any such action or inaction of
the Originator, when acting as Servicer, in connection with the enforcement of
any Lease in a manner consistent with the provisions of this Assignment and
Servicing Agreement) or any claim by any Lessee against the Originator and, in
any such case, the event or condition causing such termination, reduction,
impairment or claim shall not have been cured or corrected within [30] days
after the earlier of the date on which the Originator is given notice thereof by
the Issuer or the Trustee or the date on which the Originator otherwise first
has notice thereof, the Originator will purchase such Warranty Lease, Lease and
the Equipment subject thereto by paying to the Trustee, not later than the third
Business Day after the Determination Date next following the expiration of such
30-day period with respect to the events referenced in Section 5.04(a)(i) and
(ii), an amount equal to the Purchase Amount, and simultaneously with such
purchase, the Originator shall reimburse the Servicer for all amounts, if any,
theretofore advanced by the Servicer pursuant to Section 5.01 with respect to
such Lease. Without limiting the generality of the foregoing, it is agreed and
understood that for purposes of this Section 5.04, any inaccuracy in any
representation or warranty with respect to (i) the priority of the Lien of the
Indenture with respect to any Lease or (ii) the amount (if less than
represented) of the Lease Payments, Casualty Payments, Termination Payment or
Booked Residual Value under any Lease shall be deemed to be material.
(b) By the Issuance Date, the Originator agrees to obtain and
provide to the Trustee UCC searches against it from the central filing offices
in [Georgia] confirming the absence of any UCC filings (other than those in the
process of being released pursuant to releases delivered on the Issuance Date)
against the Originator with respect to the Leases (including the right to
receive all payments due or to become due thereunder) and the Equipment, other
than those naming the Seller or the Issuer as the owner of the Leases or the
Trustee as secured party. In the event the Originator fails to provide any such
searches required by the preceding sentence of this Section 5.04(b) within the
required time period or any search reveals the existence of any conflicting
Liens (which are not removed within 30 days of receipt of such search), the
Originator shall be required to purchase not later than the third Business Day
after the Determination Date following the expiration of the time period during
which such search was to be obtained or such Lien released, as the case may be,
any Lease of Equipment in any such state for which such searches are not
provided or with respect to which conflicting Liens are found to exist at the
Lease Purchase Amount for such Lease.
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(c) The Originator's obligations under this Section 5.04 are the
full recourse obligations of the Originator and shall in no way be limited or
discharged by the application of any funds constituting part of the Trust
Estate.
5.05 Payment Advices.
Each payment to the Trustee pursuant to any of the provisions of
this Assignment and Servicing Agreement shall be accompanied by written advice
containing sufficient information to identify the Lease and/or Equipment to
which such payment relates, the Section of this Assignment and Servicing
Agreement pursuant to which such payment is made, and the proper application
pursuant to the provisions of the Indenture of the amounts being paid.
SECTION 6. INFORMATION TO BE PROVIDED
6.01 Monthly Status Reports; Servicing Reports.
(a) Within five Business Days following each Payment Date, the
Servicer will send to the Trustee (copies of which the Trustee shall send to
each Rating Agency and to each holder of the Notes as provided in the Indenture)
a written report, signed by one of the Servicer's financial officers, (i)
identifying each Lease with respect to which any Lease Payment was 30 or more
days overdue as of the end of the immediately preceding Lease Payment Period,
the Discounted Present Value of such Lease as of such Payment Date, the amount
advanced by the Servicer with respect to such Lease pursuant to Section 5.01
hereof since the Servicer's previous monthly report (or, in the case of the
first such report, since the Cut-Off Date), (ii) identifying each Lease with
respect to which any Lease Payment was 60 or more days overdue as of the end of
the immediately preceding Lease Payment Period, the Discounted Present Value of
such Lease as of such Payment Date, the amount advanced by the Servicer with
respect to such Lease pursuant to Section 5.01 hereof since the Servicer's
previous monthly report (or, in the case of the first such report, since the
Issuance Date), (iii) identifying each Lease with respect to which any Lease
Payment was [93] or more days overdue as of the end of the immediately preceding
Lease Payment Period, the Discounted Present Value of such Lease as of such
Payment Date, the amount advanced by the Servicer with respect to such Lease
pursuant to Section 5.01 hereof since the Servicer's previous monthly report
(or, in the case of the first such report, since the Issuance Date), (iv)
identifying each Lease which became a Defaulted Lease as of the preceding
Determination Date and specifying the Discounted Present Value of such Lease as
of such Determination Date (or, in the case of the first such report, subsequent
to the CutOff Date) and the aggregate Discounted Present Value of all such
Defaulted Leases, (v) indicating the aggregate amount recovered by the Servicer
subsequent to the preceding Payment Date (or, in the case of the first Payment
Date, subsequent to the Cut-Off Date) and on or prior to such Payment Date with
respect to Lease Delinquency Payments and Defaulted Lease Payments previously
made by the Seller and the Servicer (and the specific amounts so recovered with
respect to any Defaulted Lease) as of the related Determination Date]. Each such
report shall also describe generally what action or actions the Servicer is then
taking or proposes to take to recover from the appropriate Lessees any amounts
previously paid by the Servicer to the Trustee pursuant to Section 5.01 hereof.
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(b) On the second Business Day preceding the Payment Date, the
Servicer shall deliver to the Trustee and to each Rating Agency a certificate
signed by an officer of the Servicer (a "Servicing Report") stating the date and
in the form of Exhibit C hereto.
(c) The Servicing Report shall include, among other items, the total
amount of all Lease Payments, Casualty Payments, Termination Payments, Lease
Purchase Amount, recoveries related to Defaulted Leases, Similar Transaction
Payments and Other Lease Payments received by the Servicer and deposited in the
Collection Account prior to such Determination Date and on or subsequent to the
Determination Date preceding such Determination Date (or, in the case of the
first Determination Date, on or subsequent to the Cut-Off Date). Such report
shall indicate the amount of all Lease Payments received by the Servicer and
deposited in the Collection Account which are for any Lease Payment Period other
than the Lease Payment Period for such Determination Date and shall identify
each Lease with respect to which a Casualty Payment, Termination Payment or
Lease Purchase Amount was made during such time period. Such report shall also
indicate (i) the aggregate amount paid by the Servicer on or subsequent to the
most recent Determination Date with respect to Defaulted Leases pursuant to
Section 5.01 hereof, and (ii) the aggregate amount reimbursed to the Servicer
prior to the most recent Determination Date and on or subsequent to the
Determination Date preceding such Determination Date (or, in the case of the
first Determination Date, on or subsequent to the Cut-Off Date) for actual cash
payments made by the Servicer with respect to Defaulted Leases pursuant to
Section 5.01 hereof. Such report shall also include the amount of the
distribution with respect to each class of Notes, the amount of such
distribution allocable to principal, the amount of such distribution allocable
to interest, the Asset Pool balance, if applicable, as of the close of business
on the last day of the related Remittance Period, the aggregate outstanding
principal balance and the Pool Factor for each class of Notes after giving
effect to all distributions allocable to principal on such Payment Date, the
amount paid to the Servicer, if any, with respect to the related Remittance
Period, and the amount of the aggregate purchase amounts for Leases that have
been reacquired, if any, for such Remittance Period. The Servicer hereby
represents and warrants that such calculations will be correct and accurate, and
the Servicer shall be fully responsible for, and shall reimburse and indemnify
each Indemnified Party for, any loss resulting from such Indemnified Party's
reliance on any such calculations which are not correct.
(d) The Servicer shall deliver to the Issuer and/or the Trustee
within [135] days following the end of each fiscal year of the Servicer,
beginning with the Servicer's fiscal year ending September 30, 1998, an
Officers' Certificate stating that the Servicer has fulfilled its obligations
under the Assignment and Servicing Agreement in all material respects throughout
the preceding twelve (12) months (or, in the case of the first such certificate,
the period from the applicable Issuance Date) or if there has been any material
default under the Assignment and Servicing Agreement, describing such default.
(e) The Servicer shall deliver to the Trustee within 120 days
following the end of each fiscal year of the Servicer, beginning with the
Servicer's fiscal year ending September 30, 1998, a report (the "Supplementary
Report") signed by an authorized officer on behalf of the Servicer and dated as
of the last day of such fiscal year, stating that (a) a review of the activities
of the Servicer and the Servicer's performance under the Assignment and
Servicing Agreement for the previous 12-month period has been made under such
officer's supervision and (b) nothing has come to such officer's attention to
indicate that an Event of Servicing Termination has
26
occurred, or, if such Event of Servicing Termination has so occurred and is
continuing, specifying each such event known to the officer, the nature and
status thereof and the steps necessary to remedy such event.
(f) If the Servicer intends to withdraw any funds from the
Collection Account other than on a Payment Date, the Servicer shall submit with
such report a certificate (i) setting forth the amounts to be withdrawn (on an
item-by-item basis), (ii) stating that none of such amounts are all or part of
any Lease Payment, Lease Delinquency Payment, recoveries related to Defaulted
Leases, Lease Purchase Amount, Casualty Payment or Termination Payment and (iii)
identifying the lease or leases to which such amounts relate.
(g) Within the prescribed period of time for tax reporting purposes
after the end of each calendar year, the Issuer, or the Servicer on behalf of
the Issuer, will provide to the Noteholders a statement containing the
distribution amount with respect to each class of Notes and the distribution
amount allocable to interest for that calendar year and any other information
required by applicable tax laws, for the purpose of the Noteholders' preparation
of federal income tax returns.
6.02 Annual Independent Public Accountant's Report.
The Servicer shall cause a firm of independent public accountants
(who may also render other services to the Servicer or to the Seller or
Originator) to deliver to the Trustee, with a copy to each Rating Agency, within
[135] days following the end of each fiscal year of the Servicer, beginning with
the Servicer's fiscal year ending September 30, 1998, a written statement to the
effect that such firm has (a) obtained from the Servicer a copy of the monthly
status report pursuant to Section 6.01 for a single month during the previous
calendar year; (b) compared the information contained in such monthly status
report and in the monthly summaries prepared by the Servicer in support of such
monthly status report to the computer printouts and accounts prepared by the
Servicer and supporting such reports; and (c) selected, at random, at least 100
Leases included in the Trust Estate and compared the activity in the files
maintained by the Servicer for such Leases to the activity as reported for those
Leases to the monthly summaries prepared by the Servicer and supporting the
monthly status report, and that, on the basis of such examination and
comparison, such firm is of the opinion that the Servicer has prepared such
monthly status report and summaries in agreement with the computer printouts,
accounts and individual Lease files, except in each case for (x) such exceptions
as such firm shall believe to be immaterial and (y) such other exceptions as
shall be set forth in such statement.
SECTION 7. THE SERVICER
7.01 Merger or Consolidation of the Servicer.
The Servicer will keep in full force and effect its existence,
rights and franchise as a corporation under the laws of its jurisdiction of
incorporation and will preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is necessary to
protect the validity and enforceability of any of the Leases or to permit
performance of the Servicer's duties under this Assignment and Servicing
Agreement.
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The Servicer shall not merge or consolidate with any other Person
unless (i) the entity surviving such merger or consolidation is a corporation
organized under the laws of the United States or any jurisdiction thereof and
(ii) the surviving entity, if not the Servicer, shall execute and deliver to the
Issuer, the Servicer and the Trustee, in form and substance satisfactory to each
of them, (a) an instrument expressly assuming all of the obligations of the
Servicer hereunder and (b) an opinion of counsel to the effect that such Person
is a corporation of the type described in the preceding clause (i) and has
effectively assumed the obligations of the Servicer hereunder. Upon the
occurrence of any such merger or consolidation, the Servicer shall give notice
promptly to the Rating Agencies.
7.02 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees
or agents of the Servicer shall incur any liability to the Issuer, the Trustee
or the holders of the Notes for any action taken or not taken in good faith
pursuant to the terms of this Assignment and Servicing Agreement with respect to
any Lease (including any Defaulted Lease) or the Equipment subject thereto;
provided, however, that this provision shall not protect the Servicer or any
such person against any breach of warranties, representations or covenants made
by it herein or in any certificate delivered in conjunction with the purchase of
the Notes or for any liability which would otherwise be imposed for any action
or inaction resulting from willful misconduct or bad faith or for negligence in
the performance or nonperformance of its duties hereunder.
7.03 Servicer Not to Resign or Be Removed.
The Servicer shall not resign from the servicing obligations and
duties hereby imposed on it except upon determination that such duties hereunder
are no longer permissible under applicable law. Any such determination
permitting the resignation of the Servicer shall be evidenced by an opinion of
independent counsel to the Servicer, in form and substance satisfactory to the
holders of the Notes, to such effect delivered to the Trustee.
Except as provided in Section 10.02 hereof, the Servicer shall not
be removed or be replaced as Servicer with respect to any Lease or any of the
Equipment.
No resignation or removal of the Servicer shall in any event (i)
become effective until the Trustee or a successor servicer shall have assumed
the Servicer's servicing responsibilities and obligations in accordance with
Section 10.02 hereof, or (ii) affect the Seller's obligations pursuant to
Section 4 hereof.
7.04 Financial and Business Information.
The Servicer will deliver to the Issuer and the Trustee upon receipt
thereof shall deliver to each Rating Agency and upon request, to any holder of
outstanding Notes evidencing not less than 25% of the Outstanding Principal
Amount of the Notes (and, upon the request of any holder of not less than 25% of
the Outstanding Principal Amount of the Notes, to any prospective transferee of
any Notes) and, in the case of subsection (c) below:
(a) Quarterly Statements - within 45 days after the end of each of
the first three quarterly fiscal periods in each fiscal year of the Servicer, a
copy of:
28
(1) a consolidated balance sheet of the Servicer (or its parent) and
its consolidated subsidiaries at the end of such quarter, and
(2) consolidated statements of income, retained earnings and cash
flow of the Servicer (or its parent) and its consolidated subsidiaries for
that quarter and for the portion of the fiscal year ending with such
quarter,
accompanied by a certificate signed by a principal financial officer of the
Servicer stating that such financial statements present fairly the financial
condition of the Servicer and its consolidated subsidiaries and have been
prepared in accordance with generally accepted accounting principles
consistently applied;
(b) Annual Statements - within 135 days after the end of each fiscal
year of the Servicer, a copy of:
(1) a consolidated balance sheet of the Servicer (or its parent) and
its consolidated subsidiaries, at the end of that year, and
(2) consolidated statements of income, retained earnings and cash
flow of the Servicer (or its parent) and its consolidated subsidiaries for
that year, setting forth in each case in comparative form the figures for
the previous fiscal year,
all in reasonable detail and accompanied by an opinion of a firm of independent
certified public accountants of recognized national standing stating that such
financial statements present fairly the financial condition of the Servicer and
its consolidated subsidiaries and have been prepared in accordance with
generally accepted accounting principles consistently applied (except for
changes in application in which such accountants concur and footnote), and that
the examination of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and such other
auditing procedures as were considered necessary in the circumstances;
(c) Notice of Servicer Event of Default - immediately upon becoming
aware of the existence of any condition or event which constitutes a Servicer
Event of Default, a written notice, by certified mail return receipt requested,
hand delivery or overnight courier, describing its nature and period of
existence and what action the Servicer is taking or proposes to take with
respect thereto;
(d) SEC and Other Reports - promptly upon their becoming available,
one copy of each report (including the Servicer's annual report to shareholders
and reports on Form 8-K, 10-K, and 10-Q), proxy statement, registration
statement, prospectus and notice filed with or delivered to any securities
exchange, the Securities and Exchange Commission or any successor agencies; and
(e) Report on Proceedings - promptly upon the Servicer's becoming
aware of
(1) any proposed or pending investigation of it by any governmental
authority or agency, or
29
(2) any court or administrative proceeding
which involves or may involve the possibility of materially and adversely
affecting the properties, business, prospects, profits or conditions (financial
or otherwise) of the Servicer, a written notice specifying the nature of such
investigation or proceeding and what action the Servicer is taking or proposes
to take with respect thereto and evaluating its merits.
7.05 Officers' Certificates.
With each set of financial statements delivered pursuant to Section
7.04, the Servicer will deliver an Officers' Certificate stating (i) that the
officers signing such Officers' Certificate have reviewed the relevant terms of
this Assignment and Servicing Agreement and have made, or caused to be made
under such officers' supervision, a review of the activities of the Servicer
during the period covered by the statements then being furnished, (ii) that the
review has not disclosed the existence of any Servicer Event of Default or, if a
Servicer Event of Default exists, describing its nature and what action the
Servicer has taken and is taking with respect thereto, and (iii) that on the
basis of such review the officers signing such certificate are of the opinion
that during such period the Servicer has serviced the Leases in compliance with
the procedures hereof except as described in such certificate.
7.06 Inspection.
The Servicer will permit, on reasonable prior notice, the
representatives of the Issuer and the Trustee and the holder of any Notes
evidencing not less than 25% of the Outstanding Principal Amount of any class of
Notes to examine all of the books of account, records, reports and other papers
of the Servicer, to make copies and extracts therefrom, and to discuss the
Servicer's affairs, finances and accounts with its officers, employees and
independent public accountants (and by this provision the Servicer authorizes
said accountants to discuss the finances and affairs of the Servicer) all at
such reasonable times and as often as may be reasonably requested for the
purpose of reviewing or evaluating the financial condition or affairs of the
Servicer or the Servicer's performance of its duties and obligations hereunder.
Any expense incident to the exercise by the Issuer, the Trustee, or any holder
of the Notes during the continuance of any Servicer Event of Default, or any
event or condition which with the giving of notice or the lapse of time or both
would become a Servicer Event of Default, of any right under this Section 7.06
shall be borne by the Servicer.
7.07 Servicer Records.
The Servicer will indicate in its records that it is servicing and
administering each Lease in its capacity as Servicer hereunder, and to the
extent it is in possession of any original Lease agreement, will hold such
Lease, subject to the provisions of the Indenture as Custodian for the Trustee.
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SECTION 8. THE ORIGINATOR
8.01 Merger or Consolidation of the Originator.
The Originator will keep in full force and effect its existence,
rights and franchise as a corporation under the laws of its jurisdiction of
incorporation and will preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is necessary to
protect the validity and enforceability of any of the Leases or to permit
performance of the Originator's duties under this Assignment and Servicing
Agreement.
The Originator shall not merge or consolidate with any other Person
unless (i) the entity surviving such merger or consolidation is a corporation
organized under the laws of the United States or any jurisdiction thereof and
(ii) the surviving entity, if not the Originator, shall execute and deliver to
the Seller, the Issuer, the Servicer and the Trustee, in form and substance
satisfactory to each of them, (a) an instrument expressly assuming all of the
obligations of the Originator hereunder and (b) an opinion of counsel to the
effect that such Person is a corporation of the type described in the preceding
clause (i) and has effectively assumed the obligations of the Originator
hereunder.
8.02 Control of Seller.
So long as any of the Notes or the other obligations secured by the
Indenture remain outstanding, the Originator will not (i) sell, pledge or
otherwise transfer any of its stock in the or (ii) vote its shares in favor of
any amendment to or alteration of the articles of incorporation [or the bylaws
(if amending or altering such bylaws would cause a material adverse effect] of
the Seller.
8.03 Financial and Business Information.
The Originator will deliver to the Issuer and the Trustee and upon
receipt thereof the Trustee shall deliver to each Rating Agency and upon
request, to any holder of outstanding Notes evidencing not less than 25% of the
Outstanding Principal Amount of Notes (and, upon the request of any holder of
outstanding Notes evidencing not less than 25% of the Outstanding Principal
Amount of the Notes, to any prospective transferee of any Notes):
(a) Notice of Servicer Event of Default - immediately upon becoming
aware of the existence of any condition or event which constitutes a Servicer
Event of Default, a written notice (with a copy to each Rating Agency)
describing its nature and period of existence and what action the Originator is
taking or proposes to take with respect thereto;
(b) SEC and Other Reports - promptly upon their becoming available,
one copy of each report (including the Originator's annual report to
shareholders and reports on Form 8-K, 10-K, and 10-Q), proxy statement,
registration statement, prospectus, Prospectus Supplement and notice filed with
or delivered to any securities exchange, the Securities and Exchange Commission
or any successor agencies;
(c) Report on Proceedings - promptly upon the Originator's becoming
aware of
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(1) any proposed or pending investigation of it by any governmental
authority or agency, or
(2) any court or administrative proceeding,
which involves or may involve the possibility of materially and adversely
affecting the properties, business, prospects, profits or condition (financial
or otherwise) of the Originator, a written notice specifying the nature of such
investigation or proceeding and what action the Originator is taking or proposes
to take with respect thereto and evaluating its merits;
(d) ERISA - (i) promptly and in any event within ten days after the
Originator knows or has reason, to know of the occurrence of a Reportable Event
with respect to a Pension Plan with regard to which notice must be provided to
the PBGC, a copy of such materials required to be filed with the PBGC with
respect to such Reportable Event and in each such case a statement of the chief
financial officer of the Originator setting forth details as to such Reportable
Event and the action which the Originator proposes to take with respect thereto;
(ii) at least ten days prior to the filing by any plan administrator of a
Pension Plan of a notice of intent to terminate such Pension Plan, a copy of
such notice; (iii) upon request of the Issuer and the Trustee, and in no event
more than ten days after such request, copies of each annual report which is
filed on Form 5500, together with certified financial statements for the Pension
Plan (if any) as of the end of such year and actuarial statements on Schedule B
to such Form 5500; (iv) promptly and in any event within ten days after it knows
or has reason to know of any event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan, a statement of the chief financial
officer of the Originator describing such event or condition; (v) promptly and
in no event more than ten days after receipt thereof by the Originator or any
Related Person, each notice received by the Originator or any Related Person
concerning the imposition of any withdrawal liability under Section 4202 of
ERISA; and (vi) promptly after receipt thereof a copy of any notice the
Originator or any Related Person may receive from the PBGC or the Internal
Revenue Service with respect to any Pension Plan; provided, however, that this
subsection (vi) shall not apply to notices of general application promulgated by
the PBGC or the Internal Revenue Service or notices which would not require any
material payment by the Originator or any Related Person; and
(e) Requested Information - with reasonable promptness, any other
data and information which may be reasonably requested from time to time.
8.04 Officers' Certificates.
With each set of financial statements delivered pursuant to Section
8.03, the Originator will deliver an Officers' Certificate stating that the
officers signing such Certificate have reviewed the relevant terms of this
Assignment and Servicing Agreement and have made, or caused to be made under
such officers' supervision, a review of the activities of the Originator during
the period covered by the income statements then being furnished and, so long as
the Originator is Servicer hereunder, that the review has not disclosed the
existence of any Servicer Event of Default or, if a Servicer Event of Default
exists, describing its nature and what action the Originator has taken and is
taking with respect thereto.
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8.05 Inspection.
The Originator will permit, on reasonable prior notice, the
representatives of the Issuer, the Servicer, the Trustee, or any holder of the
Notes evidencing not less than 25% of the Outstanding Principal Amount of any
class of Notes to examine all of the books of account, records, reports and
other papers of the Originator, to make copies and extracts therefrom, and to
discuss the Originator's affairs, finances and accounts with its officers,
employees and independent public accountants (and by this provision the
Originator authorizes said accountants to discuss the finances and affairs of
the Originator) all at such reasonable times and as often as may be reasonably
requested for the purpose of reviewing or evaluating the financial condition or
affairs of the Originator or the Originator's performance of its duties and
obligations hereunder. Any expense incident to the exercise by the Issuer, the
Trustee or any holder of the Notes during the continuance of any default by the
Originator in any of its obligations hereunder of any right under this Section
8.05 shall be borne by the Originator.
8.06 Books and Records.
The Originator will clearly mark its books and records to reflect
each contribution of a Lease and Equipment pursuant to this Agreement.
8.07 Communications.
The Originator will reply to all inquiries by third parties with
respect to the transactions contemplated by this Agreement by indicating that it
has sold the Leases and contributed its right, title and interest in the related
Equipment and that the Issuer now holds title to the Leases and such interest in
the related Equipment.
SECTION 9. THE SELLER
9.01 Merger or Consolidation of the Seller.
The Seller will keep in full force and effect its existence, rights
and franchise as a limited liability company under the laws of its jurisdiction
of organization and will preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is necessary to
protect the validity and enforceability of any of the Leases or to permit
performance of the Seller's duties under this Assignment and Servicing
Agreement.
The Seller shall not merge or consolidate with any other Person.
9.02 Control of Issuer.
So long as any of the Notes or the other obligations secured by the
Indenture remain outstanding, the Seller will not (i) sell, pledge or otherwise
transfer any of its membership interests in the Issuer or (ii) vote such
membership interests in favor of any amendment to or alteration of the
certificate of formation of the Issuer or the Operating Agreement.
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9.03 Financial and Business Information.
The Seller will deliver to the Issuer and the Trustee and upon
receipt thereof the Trustee shall deliver to each Rating Agency and upon
request, to any holder of outstanding Notes evidencing not less than 25% of the
Outstanding Principal Amount of the Notes (and, upon the request of any holder
of outstanding Notes evidencing not less than 25% of the Outstanding Principal
Amount of the Notes, to any prospective transferee of any Notes):
(a) (a) Notice of Servicer Event of Default - immediately upon
becoming aware of the existence of any condition or event which constitutes a
Servicer Event of Default, a written notice (with a copy to each Rating Agency)
describing its nature and period of existence and what action the Seller is
taking or proposes to take with respect thereto;
(b) Report on Proceedings - promptly upon the Seller's becoming
aware of
(1) any proposed or pending investigation of it by any governmental
authority or agency, or
(2) any court or administrative proceeding,
which involves or may involve the possibility of materially and adversely
affecting the properties, business, prospects, profits or condition (financial
or otherwise) of the Seller, a written notice specifying the nature of such
investigation or proceeding and what action the Seller is taking or proposes to
take with respect thereto and evaluating its merits;
(c) Requested Information - with reasonable promptness, any other
data and information which may be reasonably requested from time to time.
9.04 Inspection.
The Seller will permit, on reasonable prior notice, the
representatives of the Issuer, the Servicer, the Trustee, or any holder of the
Notes evidencing not less than 25% of the Outstanding Principal Amount of any
class of Notes to examine all of the books of account, records, reports and
other papers of the Seller, to make copies and extracts therefrom, and to
discuss the Seller's affairs, finances and accounts with its officers, employees
and independent public accountants (and by this provision the Seller authorizes
said accountants to discuss the finances and affairs of the Seller) all at such
reasonable times and as often as may be reasonably requested for the purpose of
reviewing or evaluating the financial condition or affairs of the Seller or the
Seller's performance of its duties and obligations hereunder. Any expense
incident to the exercise by the Issuer, the Trustee or any holder of the Notes
during the continuance of any default by the Seller in any of its obligations
hereunder of any right under this Section 9.04 shall be borne by the Seller.
9.05 Books and Records.
The Seller will clearly mark its books and records to reflect each
contribution of a Lease and of its right, title, and interest (other than its
ownership interest) in the Equipment subject thereto to the Issuer.
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9.06 Communications.
The Seller will reply to all inquiries by third parties with respect
to the transactions contemplated by this Agreement by indicating that it has
contributed to the Issuer the Leases and its right, title and interest (other
than its ownership interest) in the related Equipment.
SECTION 10. DEFAULT
10.01 Servicer Events of Default.
The following events and conditions shall constitute Servicer Events
of Default hereunder:
(i) failure on the part of the Servicer to deposit to the
Collection Account, or other applicable account in accordance with
the terms of the Indenture within three Business Days following the
receipt thereof any monies received by the Servicer (including,
without limitation, any Lease Payments and any Defaulted Lease
Payments) and required to be deposited hereunder;
(ii) so long as the Originator is the Servicer hereunder,
failure on the part of the Originator to pay to the Trustee on the
date when due in accordance with the terms hereof, any payment
required to be made by the Seller pursuant to Section 5 hereof;
(iii) failure on the part of either the Servicer or (so long
as the Originator is the Servicer) the Originator to observe or
perform in any material respect any other of their respective
covenants or agreements in this Assignment and Servicing Agreement
which failure continues unremedied for a period of 90 days after the
earlier of (A) the date it first becomes known to any officer of the
Originator, the Seller or the Servicer, as the case may be, and (B)
the date on which written notice thereof requiring the same to be
remedied shall have been given to the Originator or the Servicer, as
the case may be, by the Trustee, or to the Originator or the
Servicer, as the case may be, and the Trustee by the holders of not
less than 25% of the voting rights of such series of Notes;
(iv) if any representation or warranty made by the Originator
in this Assignment and Servicing Agreement or in any certificate or
other writing delivered pursuant hereto or made by any successor
Servicer in connection with such successor Servicer's assumption of
the duties of the Servicer shall prove to be incorrect in any
material respect as of the time when the same shall have been made;
provided, however, that the breach of any representation or warranty
made by the Originator or Servicer in this Assignment and Servicing
Agreement will be deemed to be "material" only if it affects the
Noteholders, the enforceability of the Indenture or of the Notes;
and provided, further, that a material breach of any representation
or warranty made by the Originator in this Assignment and Servicing
Agreement with respect to any of the Leases or the Equipment subject
thereto will not constitute a Servicer Event of Default if the
Originator purchases
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such Lease [and Equipment] in accordance with this Assignment and
Servicing Agreement or to the extent the Originator does not
purchase such Lease, if the Seller purchases such Lease in
accordance with this Assignment and Servicing Agreement.
(v) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Servicer in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or (B)
a decree or order adjudging the Servicer bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of or in respect of the
Servicer under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or
other similar official of the Servicer or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief
or any such other decree or order unstayed and in effect for a
period of 60 consecutive days;
(vi) the commencement by the Servicer of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in
respect of the Servicer in an involuntary case or proceeding under
any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law,
or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator, or similar official of
the Servicer or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the
failure by the Servicer to pay its debts generally as they become
due, or the taking of corporate action by the Servicer in
furtherance of any such action;
(vii) the failure of the Servicer to make one or more payments
due with respect to aggregate recourse debt or other obligations
exceeding [$5,000,000], or the occurrence of any event or the
existence of any condition, the effect of which event or condition
is to cause (or permit one or more persons to cause) more than
[$5,000,000] of aggregate recourse debt or other obligations of the
Servicer to become due before its (or their) stated maturity or
before its (or their) regularly scheduled dates of payment so long
as such failure, event or condition shall be continuing and shall
not have been waived by the Person or Persons entitled to
performance; or
(viii) a final judgment or judgments (or decrees or orders)
for the payment of money aggregating in excess of [$5,000,000] and
any one of such
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judgments (or decrees or orders) has remained unsatisfied and in
effect for any period of 60 consecutive days without a stay of
execution.
10.02 Termination.
So long as a Servicer Event of Default shall be continuing, the
Trustee or the holders of Notes evidencing not less than 25% of the voting
rights of such then outstanding Notes, by notice in writing to the Servicer
terminate all of the rights and obligations of the Servicer (but not the
Originator's obligations which shall survive any such termination) under this
Assignment and Servicing Agreement. On the receipt by the Servicer of such
written notice, all authority and power of the Servicer under this Assignment
and Servicing Agreement to take any action with respect to any Lease or
Equipment shall cease and the same shall pass to and be vested in the Trustee
pursuant to and under this Section and the Indenture; and, without limitation,
the Trustee is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, any and all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and assignment of any Lease and
the related Equipment, or otherwise.
10.03 Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 10.02 hereof, the Trustee, subject to the terms
of Section 5.02 of the Indenture, shall be the successor in all respects to the
Servicer in its capacity as servicer of the Leases under this Assignment and
Servicing Agreement and, to such extent, shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof (but not the obligations of the Originator
contained in Section 5 hereof which shall survive any such termination as above
provided) and shall be entitled to receive from the Issuer the Servicing Fee
provided for in Section 4.04 hereof; provided that the Trustee shall in no way
be responsible or liable for any action or actions of the Servicer before the
time the Servicer receives such a notice of termination.
(b) Notwithstanding the above, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act, give notice of such
fact to each holder of the Notes and (i) appoint an established institution
satisfactory to the holders of 66-2/3% in Outstanding Principal Amount of the
Notes as the successor to the Servicer hereunder to assume all of the rights and
obligations of the Servicer hereunder, including, without limitation, the
Servicer's right hereunder to receive the Servicing Fee (but not the obligations
of the Originator contained in Section 5 hereof) or, (ii) if no such institution
satisfactory to the holders of 66-2/3% in Outstanding Principal Amount of the
Notes is so appointed within 60 days following the giving of such notice,
appoint a bank or other established institution, which has experience in
servicing lease contracts and equipment similar to the Leases and Equipment and
as to which each of S&P and Xxxxx'x has indicated in writing that the
appointment of such Person, as the successor to the Servicer hereunder will not
result in the reduction or withdrawal of such Rating Agency's then-current
rating of the Notes or, (iii) if no such institution is so appointed, petition a
court of competent jurisdiction to appoint an institution meeting such criteria
as the Servicer hereunder. Pending appointment of a successor to the Servicer
hereunder, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the
37
Trustee shall cause such successor to the Servicer to enter into a servicing
agreement substantially in the form of this Assignment and Servicing Agreement
except that such agreement shall not include any of the Originator's
representations, warranties or obligations and the Trustee may make arrangements
for the compensation of such successor out of payments on Leases as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that provided for a successor to the Servicer in Section 4.04 hereof.
The Trustee shall provide the Rating Agencies with prior written notice of the
appointment of any successor to the Servicer.
10.04 Servicer to Cooperate.
The Servicer hereby agrees to cooperate with the Trustee or any
successor to the Servicer appointed in accordance with Section 10.03 hereof, as
applicable, in effecting the termination and transfer of the responsibilities
and rights of the Servicer hereunder to the Trustee or any successor to the
Servicer, including, without limitation, the execution and delivery of
assignments of Financing Statements, and the transfer to the Trustee or the
successor to the Servicer for administration by it of all cash amounts which
shall at the time be held by the Servicer or thereafter received with respect to
the Leases. The Servicer hereby agrees to transfer to any successor to the
Servicer its electronic records and all other records, correspondence and
documents relating to the Leases and Equipment in the manner and at such times
as the successor to the Servicer shall reasonably request. The Servicer hereby
designates the Trustee and any successor to the Servicer its agent and
attorney-in-fact to execute transfers of Financing Statements and any other
filings or instruments which may be necessary or advisable to effect such
transfer of the Servicer's responsibilities and rights hereunder.
10.05 Notification to Noteholders.
Upon any such termination or appointment of a successor to the
Servicer, the Issuer shall cause the Trustee to give prompt written notice
thereof to each Rating Agency and to each holder of the Notes in the manner
provided in the Indenture.
10.06 Remedies Not Exclusive.
Nothing in the preceding provisions of this Section 10 shall be
interpreted as limiting or restricting any rights or remedies which the Issuer,
the Trustee or any other Person would otherwise have at law or in equity on
account of the breach or violation of any provision of this Assignment and
Servicing Agreement by the Servicer, including, without limitation, the right to
recover full and complete damages on account thereof to the extent not
inconsistent with Section 7.02 hereof.
SECTION 11. SUBSTITUTION AND ADDITION OF LEASES
11.01 Substitution and Addition.
(a) Subject to the satisfaction of the requirements set forth in
Section 11.01(b) hereof, the Originator will have the right (but not the
obligation) at any time to substitute one or more Eligible Leases and the
Equipment subject thereto (each, a "Substitute Lease") for a Lease
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(for purposes of this Section 11 referred to as a "Predecessor Lease") and the
Equipment subject thereto if:
(i) the Predecessor Lease became (A) a Defaulted Lease, (B) a
Warranty Lease or (C) an Adjusted Lease during the immediately
preceding Due Period;
(ii) the aggregate Discounted Present Value of the Defaulted
Leases that are Predecessor Leases shall not in the aggregate exceed
[ ]% of the Discounted Present Value of the Leases on the Cut-Off
Date; and
(iii) the aggregate Discounted Present Value of the Adjusted
Leases and Warranty Leases that are Predecessor Leases shall not
exceed [ ]% of the Discounted Present Value of the Leases on the
Cut-off Date.
Subject to the satisfaction of the requirements set
forth in Section 5 and Section 11.01(b) hereof, in the event of an Early Lease
Termination which has been prepaid in full, the Originator will have the option
to transfer an additional lease of similar characteristics.
(b) Each transfer of Substitute Leases and addition of Additional
Leases will be subject to the satisfaction of the following conditions
precedent:
[(i) after giving effect to such additions and substitutions
and any adjustments pursuant to Section 4.02 thereof, the aggregate
Booked Residual Value of such Leases must be not less than 100% of
the Booked Residual Value of the Leases added, substituted or
adjusted since the Issuance Date.]
(ii) the final payment on such Substitute Lease or Additional
Lease must be on or prior to __________.
(iii) after giving effect to such additions and substitutions
and any adjustments pursuant to Section 4.02 hereof the aggregate
amount of Lease Payments through the term of the Leases (including
the Substitute Leases and the Additional Leases) and the Discounted
Present Value of the Performing Leases will not be materially less
than the aggregate scheduled Lease Payments of the Leases and the
Discounted Present Value of the Leases, respectively prior to such
substitution or addition or adjustment; and
(iv) after giving effect to such adjustments, additions and
substitutions, the Discounted Present Value of the Performing Leases
must not be less than the Discounted Present Value of the Performing
Leases prior to such adjustment, substitution or addition.
(v) after giving effect to such adjustments, additions, and
substitutions pursuant to Section 11, the weighted average remaining
term of the Performing Leases must not be greater than the weighted
average remaining term of the Performing Leases prior to such
adjustment, addition, and substitution.
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(vi) such Additional Lease or Substitute Lease was originated
or acquired by the Originator in accordance with the Originator's
specified underwriting criteria.
(c) Each addition and substitution pursuant to this Section 11.01
shall include the right to receive all amounts due or to become due under each
Substitute Lease being substituted or Additional Leases being purchased and any
security deposits paid by the related Lessee to the Seller in connection
therewith (other than any prepayments of rent required pursuant to the terms
thereof at or before the commencement of such Lease and any payments due before
the Lease Payment Period during which such substitution or addition is made). At
the time of each such substitution and addition, the Seller shall transfer to
the Trustee all Lease Payments actually received by the Seller which became due
during the current Lease Payment Period.
(d) To the extent the Originator does not substitute a Substitute
Lease for Leases for which any of the representations and warranties made by the
Originator or the Seller are breached (such breach a "Warranty Event"), the
Seller shall purchase such Leases.
11.02 Procedure.
(a) By 11:00 A.M. on the third Business Day following each
Determination Date, the Originator shall give written notice to the Servicer of
any substitution pursuant to Section 11.01 of Substitute Leases for Predecessor
Leases or addition of Additional Leases for Early Termination Leases which have
been prepaid in full during the preceding Lease Payment Period. By 11:00 A.M. on
the fourth Business Day following each Payment Date, the Originator shall
deliver to the Servicer and the Trustee and, to the extent not included in the
Monthly Servicer Report, the Trustee shall promptly deliver to each Rating
Agency (i) a supplement to Exhibit A hereto setting forth the information shown
thereon for each such Substitute Lease and Additional Lease, (ii) an Officer's
Certificate (A) certifying that each such Substitute Lease and Additional Lease
is an "Eligible Lease", (B) specifying each Predecessor Lease for which a
substitution has been made and each Early Termination Lease which is being
replaced by an Additional Lease and the amount of each periodic Lease Payment
[and the Booked Residual Value] under each such Predecessor Lease and the amount
of each periodic Lease Payment [and the Booked Residual Value] under each
Additional Lease and Substitute Lease being transferred thereby and (C) that all
conditions precedent to such addition or substitution have been satisfied and
(iii) such additional information concerning such Additional Leases, Substitute
Leases, Early Termination Leases or Predecessor Leases as may be needed for the
Servicer to prepare its monthly reports pursuant to Section 6.01 hereof and to
otherwise carry out its duties as servicer hereunder.
(b) Subject to the provisions of Section 11.03, the delivery of any
Officer's Certificate and supplement to Exhibit A pursuant to Section 11.02(a)
shall be conclusive evidence, without further act or deed, that during the
immediately preceding Lease Payment Period (i) that the Originator assigned to
the Seller pursuant to ss.11.01 hereof all of the Originator's right, title and
interest in and to the Substitute Leases and Additional Leases identified in
such supplement, and the related rights described in Section 11.01 hereof, and
contemporaneously the Seller assigned to the Issuer pursuant to Section 11.01
hereof all of the
40
Seller's right, title and interest in and to the Substitute Leases and
Additional Leases identified in such supplement and the related rights described
in Section 11.01 hereof, (ii) the Originator transferred to the Seller, as a
contribution of capital, all of the Originator's right, title and interest in
and to the Equipment subject to such Substitute Leases and the Seller
transferred to the Issuer, as a contribution to capital, all of the Seller's
right, title and interest (other than its ownership interest) in and to the
Equipment subject to such Substitute Leases, and (iii) the Issuer assigned and
transferred to the Seller, without representation or warranty, all of the
Issuer's right, title and interest in and to the Predecessor Leases and Early
Termination Leases identified in such Officer's Certificate and the Equipment
subject thereto and contemporaneously the Seller assigned to the Originator,
without representation or warranty, all of the Seller's right, title and
interest in and to the Predecessor Leases and Early Termination Leases
identified in such Officer's Certificate and the Equipment subject thereto. The
Originator shall promptly deliver to the Trustee (or a custodian on its behalf)
the original executed counterpart of each Substitute Lease and Early Termination
Lease assigned to the Issuer pursuant to Section 11.01 hereof and the Issuer
shall promptly request the Trustee to deliver to the Seller the original
executed counterpart of each Predecessor Lease for which substitution has been
made pursuant to Section 11.01 hereof and contemporaneously the Seller shall
promptly deliver to the Originator the original executed counterpart of each
Predecessor Lease for which substitution has been made pusuant to Section 11.01
hereof.
11.03 Objection and Purchase.
If any holder of the Notes objects to any substitution of Leases
within ten days of receipt of the Servicer's monthly report providing notice
thereof pursuant to Section 6.01 above, on the grounds either that any
Substitute Lease or Additional Lease is not an Eligible Lease within the meaning
of the definition thereof or that such substitution or addition is otherwise not
permitted under the provisions of Section 11.01 hereof, the Originator [or the
Seller] shall be entitled to present such additional information as it deems
appropriate in an effort to demonstrate that such Lease is an Eligible Lease and
that such substitution is permitted under the provisions of Section 11.01
hereof. Following such presentation, the substitution shall remain effective if
each person originally objecting to the substitution withdraws his objection. If
the conditions specified in the preceding sentence are not satisfied, or if at
any time it is established that any lease was not, at the time of substitution,
an Eligible Lease, then the Originator shall be required to purchase such Lease
in accordance with the provisions of Section 5.04 hereof.
11.04 Originator's, Xxxxxx's and Servicer's Subsequent Obligations.
Upon any substitution of Leases in accordance with the provisions of
this Section 11, the Originator's, Xxxxxx's and the Servicer's obligations
hereunder with respect to the Predecessor Lease shall cease but the Originator,
Seller and the Servicer shall each thereafter have the same obligations with
respect to the Substitute Lease substituted as it has with respect to all other
Leases subject to the terms hereof.
41
SECTION 12. ASSIGNMENT
12.01 Assignment to Trustee.
It is understood that this Assignment and Servicing Agreement and
all rights of the Issuer hereunder will be assigned by the Issuer to the Trustee
pursuant to the Indenture, for the benefit of the Trustee, the holders from time
to time of the Notes as provided in the Indenture, and may be subsequently
assigned by the Trustee to any successor Trustee or as otherwise provided in the
Indenture. Each of the Originator, the Seller and the Servicer hereby expressly
agrees to each such assignment and agrees that all of its duties, obligations,
representations and warranties hereunder shall be for the benefit of, and may be
enforced by, the Trustee, the holders from time to time of the Notes, and any
successor to or assignee of any thereof.
12.02 Assignment by Originator, Seller or Servicer.
None of the respective rights or obligations of the Originator, the
Seller and the Servicer hereunder may be assigned (other than the assignment by
the Seller to the Issuer of the covenants, representations, warranties and
obligations of the Originator) without the prior written consent of the Issuer
and the Trustee (acting upon the instructions of the holders of 66-2/3% of the
then aggregate unpaid Outstanding Principal Amount of the Notes); provided, that
nothing herein shall preclude the Servicer from performing its duties hereunder
through the use of agents to the extent that such use is consistent with the
Servicer's business practices in dealing with leases and equipment for its own
account.
SECTION 13. NATURE OF OBLIGATIONS AND SECURITY THEREFOR
13.01 Obligations Absolute.
The obligations of the Originator and Seller hereunder, and the
rights of the Trustee, as assignee of the Issuer, in and to all amounts payable
by the Originator or the Seller hereunder, shall be absolute and unconditional
and shall not be subject to any abatement, reduction, setoff, defense,
counterclaim or recoupment whatsoever, including, without limitation,
abatements, reductions, setoffs, defenses, counterclaims or recoupments due or
alleged to be due to, or by reason of, any past, present or future claims which
the Originator or the Seller may have against the Servicer, the Issuer, the
Trustee, and any holder of the Notes or any other Person for any reason
whatsoever; nor, except as otherwise expressly provided herein, shall this
Assignment and Servicing Agreement terminate, or the respective obligations of
the Issuer, the Originator, the Seller or the Servicer be otherwise affected, by
reason of any defect in any Lease or in any unit of Equipment or in the
respective rights and interests of the Issuer, the Originator, the Seller and
the Trustee therein, or by reason of any Liens, encumbrances, security interests
or rights of others with respect to any Lease or any unit of Equipment, or any
failure by the Issuer or the Servicer to perform any of its obligations herein
contained, or by reason of any other indebtedness or liability, howsoever and
whenever arising, of the Issuer, the Servicer, the Trustee, or any holder of the
Notes to the Originator, the Seller or any other Person or by reason of any
insolvency, bankruptcy, or similar proceedings by or against the Originator, the
Seller, the Servicer, the Issuer, the Trustee or any other Person or for any
other cause whether similar or
42
dissimilar to the foregoing, any present or future law to the contrary
notwithstanding, it being the intention of the parties hereto that all
obligations of the Originator or the Seller hereunder and all amounts payable by
the Originator or the Seller hereunder shall continue to be due and payable in
all events and in the manne and at the times herein provided unless and until
the obligation to perform or pay the same shall be terminated or limited
pursuant to the express provisions of this Assignment and Servicing Agreement.
13.02 Security for Obligations.
As security for the full and timely performance by the Originator,
the Seller and the Servicer of each of its obligations hereunder, and by the
Issuer of each of its obligations hereunder and under the Notes and the
Indenture, each of the Originator and the Seller hereby pledges and grants to
the Trustee (as a precaution in the event that, contrary to the intent of the
parties to the transactions contemplated hereby, it is contended that either has
any continuing interest in any Lease or item of Equipment subject to the
Indenture) a first priority Lien on and security interest in all right, title
and interest of the Originator or the Seller now or hereafter acquired in and to
each Lease (including the right to receive all payments due or to become due
thereunder) and each item of Equipment at any time subject to the Indenture. The
foregoing security interest is granted upon and is subject to the same terms and
provisions as are set forth in the Indenture and shall continue in full force
and effect until the same is discharged in accordance with the terms therein,
notwithstanding any waiver or modification of any of the terms hereof or thereof
or of any of the Notes, whether with or without the consent of the Originator or
the Seller.
13.03 Further Assurances; Financing Statements.
Each of the Originator, the Seller and the Servicer severally agrees
that at any time and from time to time, at its expense, it shall promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable or that the Issuer or the Trustee may
request to perfect and protect the assignments and security interests granted or
purported to be granted herein with respect to the Leases and the Lease Payments
or to enable the Issuer or the Trustee to exercise and enforce its rights and
remedies under this Agreement with respect to any Leases and the Lease Payments.
Without limiting the generality of the foregoing, each of the Originator and the
Seller shall execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices as may be necessary or
desirable or that the Issuer or the Trustee may request to protect and preserve
the assignments and security interests granted by this Agreement with respect to
the Leases.
SECTION 14. DEFINITIONS
As used in this Assignment and Servicing Agreement, the following
terms have the respective meanings set forth below or set forth in the Section
hereof or in any other agreement indicated:
Accumulated Funding Deficiency - a funding deficiency described in
Section 302 of ERISA.
43
Additional Lease - each separate lease agreement and each lease
schedule or supplement (and each master lease agreement insofar as the same
relates to any such schedule or supplement) acquired by the Seller from the
Originator and acquired by the Issuer from the Seller with all or a portion of
the proceeds of an Early Termination Lease that has been prepaid in full
pursuant to Section 11 hereof.
Adjusted Lease - a Lease which has had one or more non-credit
related terms adjusted or modified by the Servicer.
Affiliate - Section 1.01 of the Indenture.
Asset Pool - property that includes: A portfolio of chattel paper
composed of leases, leases intended as security agreements, installment sales
contracts, or rental stream obligations, together with all monies received
relating thereto; the seller's security or other interests (other than its
ownership interest) in the underlying equipment, property and proceeds relating
to the leases--however, the asset pool will not have any residual interest in
the related equipment after the related lease receivable has been paid in full;
All amounts held in accounts established by the servicer pursuant to the
transaction documents; all the rights to proceeds and recoveries on insurance
policies covering the equipment and on the disposition of repossessed equipment;
credit enhancement with respect to an asset pool or any class of notes; the
interest of the issuer in any proceeds from recourse to lessees on lease
payments; other rights of the issuer under the lease receivables transfer
agreement; and all proceeds of the foregoing.
Booked Residual Value - the estimated residual value of the
Equipment recorded on the books of the Seller.
Business Day - any day that is not a Saturday, Sunday or other day
on which commercial banking institutions in the city in which the Corporate
Issuer Office or the Servicer is located are authorized or obligated by law or
executive order to remain closed.
Casualty Payment - any payment pursuant to a Lease on account of the
loss, theft, condemnation, governmental taking, destruction, or damage beyond
repair of any item of Equipment subject thereto which results, in accordance
with the terms of the Lease, in a reduction in the number or amount of any
future Lease Payments due thereunder or in the termination of the Lessee's
obligation to make future Lease Payments thereunder.
Class [A] Notes - the Issuer's Class [A-1] Notes, Class [A-2] Notes,
Class [A-3] Notes and Class [A-4] Notes.
Class [A-1] Notes - the Issuer's [ ]% Class [A-1] Lease-Backed
Notes, Series 1999-A.
Class [A-2] Notes - the Issuer's [ ]% Class [A-2] Lease-Backed
Notes, Series 1999-A.
44
Class [A-3] Notes - the Issuer's [ ]% Class [A-3] Lease-Backed
Notes, Series 1999-A.
Class [A-4] Notes - the Issuer's [ ]% Class [A-4] Lease-Backed
Notes, Series 1999-A.
Class [B] Notes - the Issuer's [ ]% Class [B] Lease-Backed Notes,
Series 1999-A.
Issuance Date -[April__, 1999], the date on which the Notes are
originally issued pursuant to the Prospectus.
Code - the Internal Revenue Code of 1986, as amended.
Collection Account - Section 1.01 of the Indenture.
Corporate Trust Office - Section 1.01 of the Indenture.
Cut-Off Date - close of business on [_____ __, 1999].
Defaulted Lease - a Defaulted Lease.
Delinquent Lease - Section 1.01 of the Indenture.
Determination Date - Section 1.01 of the Indenture.
Discounted Present Value of the Leases - Section 1.01 of the
Indenture.
Early Termination Lease - a lease which has been prepaid prior to
its original stated maturity.
Eligible Lease - Section 5.02 hereof.
Equipment - all units or items of equipment from time to time
subject to any Lease and all such units or items of equipment (to the extent of
the Issuer's interest therein) remaining subject to the Lien of the Indenture
following the expiration or termination of the Lease to which the same was
previously subject.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended.
Event of Default - Section 1.01 of the Indenture.
Event of Servicing Termination -[Not yet defined in Prospectus
Supplement].
Excess Copy Charges - Section 1.01 of the Indenture.
Fee Per Scan Charges - Section 1.01 of the Indenture.
45
Filing Requirements - Financing Statements necessary to perfect the
ownership interest of the Issuer and the perfected security interest of the
Trustee in the Leases and the Equipment.
Financing Statement - a statement filed pursuant to the UCC which
evidences a perfected security interest in an asset.
Governmental Authority: Any court or federal or state regulatory
body, administrative agency or other tribunal or other governmental
instrumentality.
Granted Assets - The assets of the Granting Clause of the Indenture.
Indemnified Party - Section 5.03 hereof.
Indenture - the Indenture dated as of [_____ __, 1999], between the
Issuer and the Trustee, as the same may be supplemented, modified or amended
from time to time in accordance with the terms thereof.
[Inter-Company Loans - Section 15.01 hereof.]
Issuance Date - [_____ __, 1999.]
Issuer - IKON Receivables, LLC , a Delaware limited liability
company, and any successor.
Lease - each separate lease agreement and each lease schedule or
supplement (and each master lease agreement insofar as the same relates to any
such schedule or supplement) described on Exhibit A hereto, as the same may be
amended or modified from time to time in accordance with the provisions hereof
and thereof.
Lease Delinquency Payment - Section 1.01 of the Indenture.
Lease Payment - Section 1.01 of the Indenture.
Lease Payment Period - with respect to any Payment Date and the
Determination Date with respect thereto, the calendar month prior to the month
in which such Payment Date and Determination Date occur.
Lease Receivables - with respect to any Lease, all amounts owing by
the Lessee thereunder.
Lease Purchase Amount - at any date with respect to any Lease, an
amount equal to the sum of (i) the Discounted Present Value of the Lease as of
the prior Payment Date plus any amounts previously due and unpaid, and (ii) the
product of (x) the Initial ADRB and (y) the ratio, as of the Cut-Off Date, that
the Booked Residual Value of the Lease bears to the aggregate Booked Residual
Value of all Leases.
Lessee - each lessee under a Lease.
46
Lien - means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics liens, and any liens
that attach to a Lease by operation of law.
Liquidity Reserve Account - Section [1.01]of the Indenture.
Maintenance Charges - Section 1.01 of the Indenture.
[Nominal Buy-Out Lease - each Lease identified on Exhibit A hereto
as having an estimated residual value of $10 or less in the column under
the-heading "RESIDUAL".]
Nonrecoverable Advance - any advance made or to be made by the
Servicer pursuant to Section 5.01 hereof which, in the good faith judgment of
the Servicer, will ultimately not be recoverable by the Servicer under the terms
of this Assignment and Servicing Agreement and the Indenture.
Noteholder - at any time, any Person in whose name a note is
registered in the Note Register (as defined in the Indenture).
Notes - the Class [A] Notes and Class [B] Notes issued pursuant to
the Indenture and all notes issued in exchange therefor pursuant to the
Indenture.
Officers' Certificate - with respect to the Seller, Servicer or
Originator, a certificate delivered to the Trustee and signed by the Chairman,
the President, or a Vice President, and by another Vice President, the
Treasurer, an Assistant Treasurer, the Secretary, or an Assistant Secretary of
the Seller or Servicer, as the case may be, who is not the same person as the
other officer signing such certificate.
Original Principal Amount of the Notes - the principal amount of the
Notes originally issued on the Issuance Date.
Other Lease Payments - Section 1.01 of the Indenture.
Outstanding Principal Amount - Section 1.01 of the Indenture.
PBGC - the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
Payment Date - the 15th day of each calendar month (or the next
Business Day thereafter if such day is not a Business Day).
Predecessor Lease - Section 11.01 hereof.
Pension Plan - Section 2.13 hereof.
Person - an individual, partnership, corporation, joint venture,
association, limited liability company, Trust (including any beneficiary
thereof) or unincorporated organization, or a government or agency or political
subdivision thereof.
47
Pool Factor - a seven-digit decimal, which the Servicer will
compute, for each class of Notes, prior to each distribution with respect to
such class of Notes, indicating the remaining outstanding principal balance of
such class of Notes as of the applicable Payment Date, as a fraction of the
initial outstanding principal balance of such class of Notes.
Prime Rate - the prime lending rate.
Prohibited Transaction - any transaction described in Section 406 of
ERISA which is not exempt by reason of Section 408 of ERISA or the transitional
rules set forth in Section 414(c) of ERISA and any transaction described in
Section 4975(c) of the Code which is not exempt by reason of Section 4975(c)(2)
or Section 4975(d) of the Code, or the transitional rules of Section 2003(c) of
ERISA.
Prospectus - the form of final prospectus to be used in connection
with the public offering of the Class [A] Notes and the Class [B] Notes as filed
with the Securities and Exchange Commission pursuant to Rule 424(b).
Purchase Obligation - Section 11.03 hereof.
Rating Agency - Standard & Poor's Ratings Services, a Division of
the XxXxxx-Xxxx Companies or Xxxxx'x.
Registration Statement - the registration statement (File No.
333-71073) filed with the Securities and Exchange Commission for the
registration of the Class [A] Notes and the Class [B] Notes.
Related Person - any Person (whether or not incorporated) which is
under common control with the Seller within the meaning of Section 414(c) of the
Internal Revenue Code of 1986, as amended, or of Section 4001(b) of ERISA.
Remittance Period - the period beginning on the opening of business
on the [second] day of the immediately preceding calendar month and ending on
the close of business on the [first day] of the calendar month in which such
payment date occurs.
Reportable Event - any of the events set forth in Section 4043(c) of
ERISA or the regulations thereunder, a withdrawal from a Pension Plan described
in Section 4063 of ERISA, or a cessation of operations described in Section
4062(e) of ERISA.
Reserve Account - Section 1.01 of the Indenture.
Seller - IKON Receivables Funding, Inc., a Delaware special purpose
corporation, and any successor.
Servicer - the corporation so identified in the first paragraph of
this Assignment and Servicing Agreement and any successor thereto in accordance
with the provisions hereof.
Servicer Event of Default - Section 10.01 hereof.
48
Servicing Fee - Section 4.04(a) hereof.
Servicing Report - Section 6.01(b) hereof.
Similar Transaction Amount - Section 1.01 of the Indenture.
Similar Transaction Payments - Section 1.01 of the Indenture.
Substitute Lease - Section 11.01(a) hereof.
Stated Maturity - Section 1.01 of the Indenture.
Termination Payment - Section 1.01 of the Indenture.
Transaction Payment Amount - Section 1.01 of the Indenture.
Trust Estate - Section 1.01 of the Indenture.
Trustee - [ ], and any successor thereto, as Trustee under
the Indenture.
Underwriting Agreement - the Underwriting Agreement dated [______
__, 1999] among the Issuer, IOS Capital and Xxxxxx Brothers for the purchase and
sale of the Class [A] Notes and the Class [B] Notes
Uniform Commercial Code or UCC - with respect to a particular
jurisdiction, the Uniform Commercial Code, as in effect from time to time in
such jurisdiction, or any successor statute thereto.
Warranty Lease - Section 1.01 of the Indenture.
SECTION 15. [INTER-COMPANY LOANS
15.01 Inter-Company Loans.
With the contribution of the Leases, the Issuer has acquired the
right to hold and apply in accordance with the provisions of certain of the
Leases, security deposits. The Issuer may from time to time, to the extent
permitted by law, lend such security deposits and any amounts disbursed to the
Issuer pursuant to Sections [3.04(b), 3.05(b) or 6.06] of the Indenture to the
Originator (each such advance, an "Inter-Company Loan"). Each Inter-Company Loan
shall be on a demand basis, shall bear interest at an annual rate equal to the
Prime Rate plus one percent, shall be in the form attached hereto as Exhibit B
and shall otherwise be on such arm's-length terms and conditions as the Issuer
and the Originator may agree.]
49
SECTION 16. MISCELLANEOUS
16.01 Continuing Obligations.
This Assignment and Servicing Agreement shall continue in full force
and effect until each of the Notes and any other amounts due to any holder of
the Notes have been paid in full and all other obligations, if any, secured by
the Lien of the Indenture have been fully satisfied.
16.02 GOVERNING LAW.
THIS ASSIGNMENT AND SERVICING AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAWS OF THE STATE OF NEW YORK. IF ANY PROVISION OF THIS ASSIGNMENT AND
SERVICING AGREEMENT IS DEEMED INVALID, IT SHALL NOT AFFECT THE BALANCE OF THIS
ASSIGNMENT AND SERVICING AGREEMENT.
16.03 Successors and Assigns.
This Assignment and Servicing Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Originator, the
Issuer, the Seller, the Servicer and the Trustee and shall inure to the benefit
of the successors and assigns of the holders, from time to time, of the Notes.
16.04 Modification.
The terms of this Assignment and Servicing Agreement shall not be
waived, modified or amended without the written consent of the party against
whom such waiver, modification or amendment is claimed and, in any case, the
Trustee (acting upon the instructions of the holders of Notes evidencing at
least a majority of the voting rights of such then outstanding Notes).
16.05 No Proceedings.
The Originator, the Seller and the Servicer, each hereby agree that
it will not, directly or indirectly, aid, or direct or cause its officers,
directors, or employees to aid, institute, or cause to be instituted, against
the Issuer any proceeding of the type referred to in Section [6.01(b) or (c)] of
the Indenture so long as there shall not have elapsed one year plus one day
since the latest maturing Notes have been paid in full in cash.
16.06 Notices.
All notices and other communications given in connection with this
Assignment and Servicing Agreement shall be sufficient for every Person
hereunder (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid or certified mail return receipt requested, or sent
by private courier or confirmed telecopy, in case of the Originator, to 1738
Bass Road, P.O. Box 9115, Macon, Georgia 31208, Attention: [ ] with a copy
to
50
the General Counsel (telecopy: [ ]) and in the case of the Seller, the
Issuer, the Servicer and the Trustee and the holders of the Notes, to such
addresses as are provided pursuant to Sections [1.05 and 1.06] of the Indenture
or to such other address as either party may specify to the other from time to
time in accordance with this Section 16.06.
16.07 Counterparts.
This Assignment and Servicing Agreement may be executed in any
number of counterparts, each counterpart constituting an original, but all
together constituting only one Agreement.
16.08 Nonpetition Covenant.
The Originator shall not petition or otherwise invoke the process of
any Governmental Authority for the purpose of commencing or sustaining a case
against the Issuer under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, Trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
its respective property, or ordering the winding up or liquidation of the
affairs of the Issuer. Neither the Originator nor the Seller shall petition or
otherwise invoke the process of any Governmental Authority for the purpose of
commencing or sustaining a case against the Issuer under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, Trustee, custodian, sequestrator or other similar official of the
Issuer or any substantial part of its respective property, or ordering the
winding up or liquidation of the affairs of the Issuer.
51
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Servicing Agreement as of the date and year first written above.
IOS CAPITAL, INC., as
Originator and Servicer
By:
-----------------------------------
Name:
Title:
IKON RECEIVABLES FUNDING, INC.
By:
-----------------------------------
Name:
Title:
IKON RECEIVABLES, LLC.
By: [ ]
By:
--------------------------------
Name:
Title:
The undersigned hereby acknowledges
receipt of a copy of the foregoing
Assignment and Servicing Agreement and
agrees to, and to be bound by, each of
the provisions thereof applicable to the
undersigned.
[ ]
as Trustee
By:
-----------------------------
Name:
Title:
EXHIBIT A
SCHEDULE OF LEASES AND EQUIPMENT
A-1
EXHIBIT B
INTER-COMPANY LOAN NOTE
ALL RIGHT, TITLE AND INTEREST IN AND TO THIS PROMISSORY NOTE ON THE PART OF IKON
RECEIVABLES, LLC HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST IN
FAVOR OF [ ], AS TRUSTEE, UNDER AN INDENTURE DATED AS OF ______ __, 1999,
FOR THE BENEFIT OF THE PERSONS REFERRED TO THEREIN.
$[ ] ______ __, 1999]
IOS CAPITAL, INC., a Delaware corporation (the "Maker"), with its
principal office at 0000 Xxxx Xxxx, X.X. Box 9115, Macon, Georgia 31208, FOR
VALUE RECEIVED, hereby promises to pay to the order of IKON Receivables, LLC, a
limited liability company with its offices located at 000 Xxxxxxxxxx Xxxx, Xxxxx
00, Xxxxxxxxxx, Xxxxxxxx 00000 or its assignee (the "Payee"), for its account,
the principal sum of [ ]($[ ]) (or such lesser amount as shall equal
the aggregate unpaid principal amount of the Loans made by the Payee to the
Maker under the Sale Agreement (as defined below)), together with interest per
annum on the unpaid principal amount hereof at the Prime Rate plus one per cent,
in lawful money of the United States of America and in immediately available
funds immediately on the demand of the Payee.
The date, amount and interest rate, of each Loan made by the Payee
to the Maker, and each payment made on account of the principal thereof, shall
be recorded by the Payee on its books and, prior to any transfer of this Note,
endorsed by the Payee on the schedule attached hereto or any continuation
thereof.
This Note evidences certain Inter-Company Loans from Payee to Maker
pursuant to Section 15.01 of that certain Assignment and Servicing Agreement
dated as of [______ __, 1999], between the Maker and the Payee (the "Sale
Agreement"). Capitalized terms used in this Note have the respective meanings
assigned to them in the Sale Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
IOS CAPITAL, INC.
By
-------------------------------
SCHEDULE OF LOANS
This Note evidences demand Loans made under the within-described
Sale Agreement to the Maker, on the date, at the interest rate, and in the
principal amounts set forth below, subject to the payments and prepayments of
principal set forth below:
--------------------------------------------------------------------------------
Principal Amount Unpaid
Amount of Interest Paid or Principal Notation
Date Loan Rate Prepaid Amount Made By
---- ---- ---- ------- ------ -------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EXHIBIT C
Form of Servicing Report
Line
1 Transaction Cash Flow - see computer detail
1/1 Beginning Net Present Value
1/2 Less:
- current month
1/3 Add: Actual Interest Payment (Weighted Avg. A & B notes)
1/4 Add: 0.75% Servicing Component
1/5 Less: Current month Defaulted
1/5a Less: Warranty Leases
1/6 Less: Amounts on Early Terminations
1/7 Add: Amounts due to Substitutions
1/8 Add: Amounts due to Additional leases (Prepaid leases)
1/9 Ending Net Present Value
2 Overdue Lease Payments - see computer detail
2/1 Beginning Balance
2/2 (Memo) Overdue Payments Received
2/3 Less: Reimbursed Per This Report
2/4 Less: Past Dues on Disqualified Leases - Early Terminations
2/5 Less: Past Dues on Disqualified Leases - Defaulted and Warranty
2/6 Add: Last Month's Current Payments that became Past due
2/7 Add: Received on Replacements Leases
2/8 (MEMO) Net New Advances
2/9 Ending Balance
3 Collection account-Advance Lease Payments
4/1 Beginning Balance
4/2 Less: Applied to Current from Prepaid
4/3 Less: Advance on Disqualified Leases
4/4 Add: Received This Month
4/5 Add: Received on Replacement Leases
4/6 Ending Balance
4 Cash Reserve Account
6/1 Beginning Balance
6/2 Less: New Obligations: Total Shortfall (B9)
6/3 Plus: Interest earned on Cash Reserve Acct.
6/4 Ending Balance
6/5 ___% of Outstanding Note Value
6/6 Lesser of __% of $__________ and Outstanding Note Value
6/7 Target Cash Reserve (Greater of 6/5 & 6/6)
6/8 Cash Reserve Release (6/4-6/7)
6/9 Ending Balance Cash Reserve Account
5 Defaulted Leases
8/1 Beginning Balance of Defaulted Leases
C-1
8/2 Plus Current Month Additions
8/3 Plus Past Due Payments on Defaulted Leases
8/4 Less Current Month Recoveries
8/5 Ending Balance
Cash Receipts
Line
A/1 Regular monthly payments
A/2 Overdue payments
A/3 Overdue Payments due on Early Termination and Termed Out Leases (From
Seller)
A/4 Advance Payments of monthly rentals
A/5 Residual Values
A/6 Recoveries on Defaulted Leases
A/7 Proceeds from investment of Collection Accounts funds
A/8 Casualty and Termination Payments
A/9 Servicer Advances
A/10 Total Receipts
Disbursement Requirements
Line
B/1 Past Due Payments Collected, Due Servicer (COLLECTION ACCT)
B/2 Overdue Payments Advanced, on Disqualified Leases (COLLECTION ACCT)
B/3 Servicing Fee (COLLECTION ACCT)
B/4 Advanced Payments on Disqualified Leases (COLLECTION ACCT)
B/5 Total to Servicer
B/6 Collection Account - Advanced Rents (Monthly-Increase/(Decrease))
B/7 Net cash receipts
B/8 Shortfall
B/9 Draw on Cash Reserve
B/10 Total Available Funds
C Noteholders
C/1 Class [A-1] Interest Paid ____%
C/2 Class [A-2] Interest Paid ____%
C/3 Class [A-3] Interest Paid ____%
C/4 Class [A-4] Interest Paid ____%
C/5 Class [B] Interest Paid ____%
C/9 Beginning Class [A-1] Note Balance
C/10 Class [A-1] Note Value Target (___% of 1/9)
C/11 Class [A-1] Principal Paid
C/12 Beginning Class [A-2] Note Balance
C/13 Class [A-2] Note Value
C/14 Ending Class [A-2] Note Balance
C/15 Class [A-2] Principal Paid
C/16 Beginning Class [A-3] Note Balance
C/17 Class [A-3] Note Value
C/18 Ending Class [A-3] Note Balance
C/19 Class [A-3] Principal Paid
C/20 Beginning Class [A-4] Note Balance
C/21 Class [A-4] Note Value
C/22 Class [A-4] Principal Paid
C/23 Ending Class [A-4] Note Balance
C-2
C/24 Beginning Class [B] Note Balance
C/25a Class [B] Note Value Target (__% of 1/9)
C/25b Class [B] Note Value Floor (__% of $__________ + Cum. Losses-C/12-6/4)
C/26 Class [B] Principal Paid
C/27 Ending Class [B] Note Balance
C/42 Balance Available for Distribution to IOS Capital
D Miscellaneous Tracking Items
D/1 % of Total Defaulted and Warranty substituted as per Initial Outs, Note
Value
D/2 (MEMO) Cumulative amounts on Early Lease Terminations due to modification
of leases
D/3 (MEMO) Cumulative amounts of additional leases purchased
D/4 (MEMO) Avg. residual realization greater than booked residual by Document
Imaging and Major Accounts division for last three months (Yes/No)
D/5 % of Total Variance of Residuals substituted for Defaulted & Prepaid
leases and residuals of Substituted leases to Initial pool booked
residuals
C-3
